u 




Class 
Book 



^ . M 



Copyright^ . 



COPYRIGHT DEPOSIT 



THE A B C OF TAXATION 



V>he 

A B C of Taxation 

With Boston Object Lessons, Private 

Property in Land, and Other 

Essays and Addresses 



By 

C. B. FILLEBROWN 

n 

President Massachusetts Single Tax League 




New York 

Doubleday, Page & Company 

1909 









ALL RIGHTS RESERVED, INCLUDING THAT OF TRANSLATION 
INTO FOREIGN LANGUAGES, INCLUDING THE SCANDINAVIAN 



COPYRIGHT, Ipog, BY C. B. FILLEBROWN 
PUBLISHED, FEBRUARY, I909 



LIBRARY of CONGRESS 

Two Cooies Received 

FEB 17 1B09 

Copyrignt Entry _ 
CLASS &*. XXC. No. 
COPY B. 



PREFACE 

Twelve years of zealous study and discussion of 
the subject of taxation have brought me at last to 
what should have been my starting point — what, as 
it now appears to me, should be the starting point of 
every student, to wit : the recognition that invest- 
ments in land are exempt from taxation. The desire 
to make the path smoother and shorter for those who 
follow me is the reason for bringing together in a 
single volume these hitherto scattered miscellanies. 

Notwithstanding their desultory form, these essays, 
discussions, and illustrations present what are in my 
judgment the fundamental issues in the field of taxa- 
tion, and I am proud to say that most of the specific 
views herein expressed have had the substantial 
approval of a majority of the prominent teachers of 
political economy. 

Although most of the matter contained in this 
volume has previously appeared in print, any value 
that it ever had is here enhanced by revision of figuies 
and conclusions to date. When referring to Henry 
George's views, I have taken pains to give what I 
believe to have been his final judgments, making the 
writer of mature age the interpreter of his own earlier 
masterpiece. 

I welcome this opportunity to record my lasting 
gratitude to all of the many friends who from first to 
last have helped to steady a wavering hand, and I 



vi PREFACE 

cannot refrain from acknowledging my special obliga- 
tions to the Hon. Charles Francis Adams; Professor 
F. Spencer Baldwin, Boston University; Professor 
Charles J. Bullock, Harvard University; the Rt. Rev. 
William Byrrie, D. D., thirty years Vicar-General 
of Archbishop Williams, of Boston ; Professor Thomas 
N. Carver, Harvaid University; Professor Henry R. 
Seager, Columbia University; Professor E. R. A. Selig- 
man, Columbia University; the late Thomas G. Shear- 
man ; Professor George Ray Wicker, Dartmouth College; 
and John Buckley Willis, A JVL, for their invaluable 
criticism and encouragement. 

C. B. FlLLEBROWN. 

Boston, January, 1909. 



IN FOUR PARTS 



Part I. The A B C of Taxation. 

Part II. Three Boston Object Lessons 
in Taxation. 

Part III. Private Property in Land, and 
other Essays and Addresses. 

Part IV. Appendix. 



ILLUSTRATIONS 



Map of Winter Street 55 

Map of Cornhill 79 

I. Estate, Southwest Corner Winter and 

Washington Streets .... 64 
II. Estate, Northwest Corner Winter and 

Washington Streets .... 64 

III. Shepard, Norwell Co. .... 65 

IV. Allen's, Nos. 17-19 Winter Street . . 65 
V. A. Stowell & Co.'s Store, 1899 . .68 

VI. A. Stowell & Co.'s Store, 1907 . . 68 
VII. Conrad & Co., Nos. 25-29 Winter Street . 69 
VIII. Old Corner Bookstore .... 69 
IX. Bromfield Street, North to Harvard Place 76 
X. Northwest Corner of Boylston and Wash- 
ington Streets 76 

XI. Ames Building, Court and Washington 

Streets 77 

XII. Estate, Corner Cambridge and Charles 

Streets ....... 77 

XIII. Howland Street, Roxbury . . .80 

XIV. Cornhil!, from the top of the Pemberton 

Building 80 

XV. Right-hand side of Cornhill, looking up 

from Adams Square . . : .81 

XVI. St. Paul's Church, Tremont Street . . 81 



PART I. 

THREE GENERIC PECULIARITIES 
OF LAND 

Chapter I. 
A Ground Rent a Social Product. 

Chapter II. 

B A Tax Upon Economic Rent Cannot 
be Shifted. 

Chapter III. 

C The Selling Value of Land an Un- 
taxed Value. 



Chapter I 



A 



THE FIRST GENERIC PECULIARITY OF LAND 

GROUND RENT A SOCIAL PRODUCT 

GROUND RENT, WHAT LAND IS WORTH ANNUALLY 
FOR USE, IS A CREATION OF THE COMMUNITY, 

A SOCIAL PRODUCT ALL LOCAL TAXES ARE 

SPENT UPON THOSE THINGS WHICH MAKE AND 
MAINTAIN GROUND RENT 

I. — Definition of Ground Rent* 

(i) "Ground rent is what land is worth for use." 
Strictly speaking, the "worth for use" attaches 
not to the land itself, but to scores of things exterior 
to the land and through it available for use, so that, 
as applied to urban land, the following would be 
more accurate: 

(2) Ground rent is the annual valuef of the exclusive 
use and control of a given area of land, involving the 
enjoyment of those rights and privileges pertaining to 



* See Appendix F. 

•j-The rental value and the capital value of land differ in that the one repre- 
sents what land is worth for use during any limited period, while the other 
represents what it is worth for "perpetual" use. 

3 



4 THE A-BCOF TAXATION 

the land which are stipulated in every title deed, and 
which, enumerated specifically, are as follows: right 
and ease oi access to water, health inspection, sewer- 
age, fire protection, police, schools, libraries, museums, 
parks, playgrounds, steam and electric railway service, 
gas and electric lighting, telegraph and telephone 
service, subways, ferries, churches, public schools, 
private schools, colleges, universities, and public build- 
ings — utilities which depend for their efficiency and 
economy on the character of the government; which 
collectively constitute the economic and social 
advantages of the land; and which are due to 
the presence and activity of population and are 
inseparable therefrom. 

II.— The Nature of Ground Rent 

As defined by Mr. Shearman, ground rent is, in its 
nature, "a tribute which natural laws levy upon every 
occupant of land as the market price of all the social as 
well as natural advantages appertaining to that land, 
including necessarily his just share of the cost of 
government/' It is found operative in every civilized 
country, automatically collecting "from every citizen 
an amount almost exactly proportionate to the fair 
and full market value of the benefits which he derives 
from the government under which he lives and the 
society which surrounds him/' It is a tribute, "a tax, 
just, equal, full, fair, paid for full value received." 
" It is not merely a tax which justice allows; it is one 
which justice demands. It is not merely one which 
ought to be collected; it is one which infallibly will 
be and is collected. It is not merely one which the 
State ought to see collected; it is one which, in the 



GROUND RENT A SOCIAL PRODUCT 5 

long run, the State cannot prevent being collected. 
Seldom has there been a more beau- 
tiful illustration of the wise yet relentless 
working of natural law than in the proved im- 
possibility of justly collecting any tax other than 
upon ground rent. It shows that nature makes 
it impossible to execute justly a statute which 
is in its nature unjust." This definition of Mr. 
Shearman is offered as one difficult to be improved 
or condensed. 

Such, it may be added, is the nature of rent — 
ground rent — that all the public and private improve- 
ments of a community to-day are reflected in the land 
values of that community. Not only this, but the 
value of all those ideal public improvements conceived 
of as being possible under Utopian conditions would 
be similarly absorbed, as it were, in the ground, 
would be reflected in its site value. Stand before a big 
mirror and you will see your image perfectly reflected 
before you. If you are a man scantily, shabbily 
clad, so is the image in the glass. The addition 
of rich and costly attire is imaged in the glass. 
Load yourself with jewels and fill your hands 
with gold: in the mirror, true to nature, is the 
image and likeness of them all. Not more perfectly, 
nor more literally, is your image reflected in the 
mirror than are public improvements reflected in 
the value of the land. 

One peculiarity in the nature of ground rent to which 
we urge your attention is the subtle relation existing 
between this natural income and the artificial outgo 
of the public taxes — a relation not unlike that of 
cause and effect, by which the wise expenditure of the 



6 THE A B C OF TAXATION 

tax contributes, in a manner especially direct, to the 
element of ground rent. 

Simple illustrations may help to open the mind 
to a consideration of whatever may seem novel 
or strange in the re-statement of a familiar truth. 
For instance: The cook turns the crank of her 
corTee mill; the whole coffee that was in the 
hopper comes out ground corTee, but it is coffee 
just the same. The Minneapolis miller lets on the 
water that turns the crank of his flour mill; the 
wheat that goes into the hopper comes out flour, 
wheat in a more subtle form. The people turn the 
crank of a great tax mill; the taxes that go into the 
hopper come out ground rent, no tax quality lost, no 
rent ingredient added. 

Or again: The myriad springs and rivulets of the 
great Mississippi are continuously delivering them- 
selves in one great river to the sea. Suppose that some 
day you should read in the weather bulletin that 
nature had decided to suspend the regular return of 
these waters in clouds and rain and dew to their 
point of departure. How long would it be before 
the Mississippi Valley would be as parched and 
dry as the Desert of Sahara, or the North End of 
the city of Boston, or the East Side of the city of 
New York ? 

Or, more pertinent still, because more vital: The 
constant round of taxes and ground rent is the blood 
circulation of the body politic. When the heart throws 
out the life blood through the arteries, if that blood 
does not return through the veins, the patient dies — 
not of heart failure, but from loss of blood. When the 
public heart charges the arteries of the land with ground 



GROUND RENT A SOCIAL PRODUCT 7 

rent, if that ground rent does not return, the body 
politic is prostrated or enervated by loss of blood. The 
body politic to-day, like a man with a ravenous 
appetite, is cleaning its plate of all the millions a year 
that it can earn, and mortgaging the future for nearly 
as much more, always eating, yet always hungry, and 
simply because the best part of its millions of dollars' 
worth of arterial life blood, instead of coming back to 
the public heart, ebbs rapidly away through severed 
blood vessels in the private appropriation of ground 
rent. 

These illustrations of the miscarriage of a bene- 
ficent provision seem to hint strongly at the true 
theory of ground rent, as waiting to be naturally 
developed under a natural law, and as a natural 
social product. 

III. — The Operation of Ground Rent 

Critical consideration is invited to Mr. Shearman's 
statement that the operation of ground rent is to 
exact from every user of land the natural tribute 
which he ought to pay in return for the perpetual 
public and social advantages secured to him by his 
location, a part of which natural tribute now goes 
to the State in the form of a tax, and the remainder 
to the landlord in the form of rent. Objection to 
monopolies and special privileges is that they partici- 
pate in the private appropriation of an undue share of 
this natural tribute, and while recognising that in 
the end all quasi-public, as well as all public service, 
should be at the least practicable cost to the people, 
it is held that meantime whatever monopoly is enjoyed 
should be obliged, through taxation, to repay to the 



8 THE A B C OF TAXATION 

public a full and fair equivalent for the privilege 
conceded to it. 

The monopolies and special privileges which should 
properly share with land values the burden of taxa- 
tion, may be partially enumerated as follows: the 
private appropriation of natural resources such as 
gold, silver, copper, iron, and coal mines, oil fields, 
and water powers ; all franchises of steam and electric 
railways; all other public franchises, granted to one 
or several persons incorporated, from which all other 
people are excluded, and which include all "rights, 
authority, or permission to construct, maintain, or 
operate in, under, above, upon, or through any streets, 
highways, or public places, mains, pipes, tanks, con- 
duits, or wires, with their appurtenances for conducting 
water, steam, heat, light, power, gas, oil, or other 
substance, or electricity for telegraphic, telephonic, 
or other purposes."* 

The reforms contemplated by the single tax would 
leave the State and the individual to deal together 
exactly as individuals deal with one another in ordinary 
business. Persons desiring special privileges would 
rent them from the State or the municipality, just as 
they now rent them from individuals and corporations, 
and on similar terms, fixed from year to year. When 
paid for in this way, the special privilege feature 
would be eliminated. Then there really would be no 
special privileges, and there would be need of no other 
taxation. Hence, we say, the least the public can 
do is to tax and collect upon these special privileges, 
including ground rent, a sum sufficient to defray 
all public expenses. 

* Quoted from the Ford Franchise Tax Act of New York. 



GROUND RENT A SOCIAL PRODUCT 9 

The value of these special privileges is held to be 
ground rent, which in turn is held to be very largely, 
if not entirely, a social product. 

IV.— The Office of Ground Rent 

The true office of ground rent is that of a board 
of equalisation — equalisation of taxation, of dis- 
tribution, and of opportunity. The tendency of an 
increase in the tax upon ground rent is not only to 
equalise taxation and distribution, but to equalise 
the opportunity of access to what is erroneously called 
the land, which of itself, even in a city, would be of 
little or no use if it had a perpetual fifty-foot tight 
board fence around it. In this clear distinction 
between land and land value, which cannot be too 
critically noted, may there not be found an explosion 
of the notion that a man has a right to the private 
appropriation of ground rent, because his father 
bought and paid for the land fifty or one hundred 
years ago? 

The question is: When he bought the land fifty 
or one hundred years ago, did he buy and pay for 
the land value of to-day? In 1686 a company having 
five shares and five stockholders bought a lot of 
land in Philadelphia for $5. In 1900 the same com- 
pany, with its five shares and five stockholders, sold 
the value of the same land for $1,000,000. Does it 
sound reasonable to say that for one pound sterling 
in 1686 these five men bought and paid for the 
$1,000,000 land value of 1900, with its ground 
rent of $40,000 a year? Would not such a sale 
in 1686 of goods to be delivered two hundred and 
fourteen years later be dealing in futures with a 



io THE A B C OF TAXATION 

vengeance? True it is that the land sold to-day 
is the same land bought in 1686. But it is just 
as true that its value to-day is not the value of 
the land itself, but is the value of the rights and 
privileges pertaining thereto, and exterior to the land 
itself. The demand that enhances land value is not 
for land itself, but for the command of these same 
rights and privileges. 

Land value being a social creation,* and rent being 
socially maintained, equal access to the rights and 
privileges pertaining to the - land can be promoted 
by the taxation of ground rent alone, and by this 
means only. Ground rent, the natural tax feeder, 
extracts from the user of land the exact measure of 
his advantage over other men in his exclusive enjoy- 
ment of rights and privileges pertaining to his own 
location, and the whole tendency of the taxation 
of ground rent is to equalise participation in these 
common rights and privileges, by commuting into 
dollars and cents, which can be divided, those indivis- 
ible advantages of location, which can only be enjoyed 
individually. Whatever of rent goes into the public 



* Professor J. B. Clark, then of Smith College, now of Columbia University, 
said, in a discussion at Saratoga, N. Y., in 1890: 

"The community has created the value that resides in land, and whoever 
usurps the ownership of it deals a blow at the community. What is more, he 
strikes at the basis of the civil order, since governments have been evolved 
in and through the effort to secure to each producer the value that he brings into 
existence, and it is anarchic in principle to habitually counteract this effort. 

"Of the wealth that resides in land, the State is certainly the creator and the 
original and lawful owner. As a sovereign it has a certain ultimate owner- 
ship of all property. Treasures of every kind are, in the last analysis, its own. 
As the creator, not of the substance of the earth, but of the value 
residing in it, the State has a producer's immediate right to use and dispose 
of its product. If any theory depreciates either the State's reserved right 
over all wealth or its special producer's claim to the wealth residing in land, so 
much the worse for that theory." 



GROUND RENT A SOCIAL PRODUCT 1 1 

treasury tends to a fairer distribution of produce in 
wages earned. Whatever of taxation is transferred 
from other wealth to ground rent leaves so much more 
wealth to be distributed in wages. 

Again, it is submitted that the true office of ground 
rent is to offer a communal shoulder suited to bear 
all the burden of common needs, leaving produce — 
current wealth — to be distributed, as fast as pro- 
duced, in wages and interest, the total volume of 
which will always be increased by the amount of rent 
appropriated through the taxation of whatever of 
economic rent there is in special privilege. 

Ground rent being a social product, is not its private 
appropriation a special privilege? 

V.— The Cause of Ground Rent 

The dimensions, as well as the continuous character 
of the contribution made by the people to the growth 
and volume of ground rent, are seldom measured — 
by many persons hardly suspected. Almost anything 
else that he owns, except land, a man may appropriate, 
destroy, tear down, burn down, remove, consume, 
change in form, wear out. To the land itself he cannot 
do any of these things. The value of its use is ground 
rent, an annual value, which is all that the owner of 
land can consume each year. The land value itself 
survives, and usually intact. People speak of owning 
land, because they or their fathers have bought and 
paid for it. 

A simple illustration will indicate how a dispro- 
portionate reliance may be placed upon this argument, 
considered in the light of all the causes contrib- 
uting to the value of land. Suppose, for instance, 



12 THE ABCOF TAXATION 

that a vacant lot was bought fifty years ago for 
1 1, ooo, which to-day is worth $10,000. The chances 
are that when the purchaser paid his original $1,000, 
the people, in one capacity or another, paid for 
the same year $50 to maintain that purchase value, 
and that for forty-nine years thereafter the people 
have paid in annual arithmetical progression up to 
$500 for the present year. The purchaser paid $1,000 
in one payment. The people have paid during the 
fifty years an average of $250 a year to maintain this 
value. On the part of the people it has been not 
unlike a continuous purchase in the proportion of 
$250 a year of the people's tax money to $50 a year of 
the purchaser's interest money. 

In addition to whatever income the purchaser has 
received, he possesses to-day $10,000 worth of land, 
while the people possess nothing except an outgo of 
5 per cent in maintenance, offset in small part by an 
income of \\ per cent in tax. Such an inheritance 
would usually be counted worse than nothing. Is it 
not reasonable that the community should derive 
profit from its part in this transaction, by appropriat- 
ing to its own use the one-half at least of that ground 
rent that is manifestly created by the simple expendi- 
ture of its taxes? Why should not taxes, all of which 
are spent upon the land, be taken from the land?* 

* E. Benjamin Andrews, formerly President of Brown University, said at 
Saratoga, N. Y., in 1890: 

"To turn the golden stream of economic rent partly or mostly into the 
State's treasury, where it would relieve the public of taxation in burdensome 
forms, seems to be extraordinarily desirable. I by no means concur in all the 
reasons which many assign for this; nor should I expect from it, even if carried 
to Mr. George's length, more than half the benefits to society which he antici- 
pates. Still the proposition to lay the main tax on land impresses me as just, 
safe, accordant with the best canons of public finance, and in fact, every way 
excellent," 



GROUND RENT A SOCIAL PRODUCT 13 

Ground rent may be said to result from at least 
three distinct causes, all connected with aggregated 
social activity: 

(1) Public expenditure: All wise public 
expenditures are direct feeders of ground rent. 
Streets, lights, water, sewerage, fire and police systems, 
public schools, libraries, museums, parks and play- 
grounds, all contribute to enhance the value of land, 
and a corresponding depreciation would follow the 
abolition of any of these systems. It follows, there- 
fore, that expenditure for maintaining these services 
constitutes the maintenance of ground rent, if not 
in a literal sense, at least in an all-sufficient common 
sense. 

(2) Quasi-public expenditure: In the same way, 
the expenditure by the municipality or by private 
corporations for steam and electric railways, gas and 
electric lights, telegraph and telephone facilities, 
subways and ferries, contributes to the value of land, 
at least to the extent of their actual cost. 

(3) Private expenditure: Equally, and by parity 
of reasoning, private or voluntary social expenditure 
for churches, private schools, colleges and universities, 
all private buildings, apartment houses, stores, and 
office buildings, contributes to ground rent, the annual 
value of land. 

In an enumeration of the causes of ground rent, 
population is usually the one first named. But a 
passive population gives little value to land; it is 
rather the activities consequent upon the character 
of population that create the value. 

It is generally conceded that, as a matter of fact, 
ground rent is what land is worth annually for use; 



i 4 THE A B C OF TAXATION 

but it is of far greater importance to understand 
clearly what is the source of ground rent, and especially 
to what extent it may be regarded as a social product. 
Inasmuch as all the contributions representing these 
activities, so far as enumerated, are from the 
treasuries of the people, it is correct and proper 
to say that ground rent is chiefly and peculiarly a 
social product. 

From one point of view (that of demand) it may 
be said that the value of all commodities is a social 
product. But when we come to consider the other 
side of 'the value problem, we find that most other 
commodities, e. g., houses, increase or decrease at man's 
will, according to the principle of cost, the value being 
a resultant of a balancing of social desire against 
social cost. 

With land it is more generally true that the 
quantity either cannot be increased at all or can 
be increased only at increasing cost; and hence the 
practical determinant of the value of land is almost 
entirely in the social and private activities that make 
the use of land desirable. 

VI. — The Maintenance of Ground Rent 

So far as the cost of streets, lights, water, 
sewerage, fire, police, schools, libraries, museums, 
parks, play-grounds, steam and electric railways, 
gas and electric lights, telegraph and telephone 
companies, subways, ferries, churches, private 
schools, colleges, universities, public buildings, well 
appointed houses, stores, and office buildings is 
what constitutes the cost value of the land, just 
so far the maintenance of all this public or 



GROUND RENT A SOCIAL PRODUCT 15 

social service constitutes the maintenance of 
ground rent. 

A simple illustration may help to an appreciation 
of the absurd absence of a true economy in tax affairs 
to-day. A landlord owns a factory which requires 
steam power, and which is useless and worthless 
without it. Another man owns a steam plant, and 
furnishes steam to factories at so much per horse power. 
The man who hires and uses the factory pays factory 
rent to his landlord, who furnishes the factory, and 
steam rent to the man who furnishes the steam. He 
would smile if you should talk to him about paying 
his steam rent to the landlord who does not furnish it. 
In vivid contrast with this sensible performance we 
may take the case of another landlord who owns a 
store, requiring public service and convenience, and 
useless without it. The municipality owns and runs 
a public service plant, and furnishes public service 
at a cost of so much per thousand dollars' worth. 
The man who hires and uses the store pays store rent 
to his landlord, who furnishes the store, but, by a 
strange perversion, he pays his public service rent 
to the same landlord. Should he not pay his public 
service rent to the public that furnishes it? 

Inasmuch as all these contributions to its main- 
tenance, so far as enumerated, are from the treasuries 
of the people, what can ground rent possibly be, if 
it is not a social product? 

VII.— An Illustration: The Ground Rent of 
Boston 

A dense skepticism and, indeed, a denser ignorance, 
seem to obtain even in regard to the simple fact that 



1 6 THE A B C OF TAXATION 

there is such a thing as ground rent, and yet 
much more in regard to what is the volume of 
ground rent. It has been questioned whether the 
ground rent of the City of Boston, for instance, 
under the single tax, with the accompanying 
shrinkage in speculative values, would exceed 
to-day 5 per cent on the assessed valuation of 
land, or $32,000,000. Indications are that the 
net rent of the land itself might not, but our 
investigations are directed to ascertaining not the 
net, but the gross, ground rent, which is net rent 
plus the taxes. 

In a systematic attempt to dispel these clouds of 
ignorance and skepticism — now to be found in sur- 
prisingly high places — and to demonstrate beyond 
a reasonable doubt about how much gross ground 
rent there is in the city of Boston, actual sales for 
the year 1902 and actual rentals have been collected 
from official sources. 

One hundred and twenty pieces of real estate* in 
various sections of the city are shown to have been sold 
at prices averaging one-fifth higher than their assessed 
valuation, indicating that at least in these one hundred 
and twenty cases the valuations were less than five- 
sixths of the selling price. 

Landlords and real estate men are the best judges of 
the following calculation which, taking into account 
the fact that the prices given in these tables are those 
indicated by the revenue stamps on deeds, assumes 
that the buildings sold for one-third more than their 
assessed valuation: 



*An exhibit of these specimen cases in detail will be found in 
Appendix G. 



GROUND RENT A SOCIAL PRODUCT 17 

Deducting from the total of prices indicated by the 

footing of the 120 sales .... $7,291,375 

Four-thirds of assessed valuation of buildings . 2,772,933 

Would give perhaps a fair estimate of what the 

land sold for ...... $4,518,442 

To this it is necessary to add the capitalised tax 
upon the land for the same year, 1900, 
$3,758,600 x $14.70 (the number of dollars 
tax per thousand) x 20 (the number of years' 
purchase) . . . . . . $1,105,028 

In order to get the gross capitalised ground rental . 

value of the land ..... $5,623,470 

Of which the assessed valuations were only two- 
thirds. 

Seven hundred and fifty-one rentals* of estates, 
together with their assessed valuations, averaging 
147,680 each, were also obtained from reliable 
sources. In the total for these it is found that 
the net rent is 5 per cent (4.8), and the gross 
rent — net rent plus taxes — is 6 per cent of the 
assessed valuation. That is to say, the net value, 
based upon net income to the owner, corresponds 
with the assessed valuation, and is five-sixths of the 
gross value, based upon what the user pays for the land. 
It is probable that these estates are in the aggregate 
improved to less than one-half of their normal efficiency, 
and hence the income which they now yield is less than 
5 per cent of the price that they would actually sell for. 

In the absence of contradictory or correcting 
testimony, it is fair to ask the reader to accept these 
lists of 120 sales and 751 estate rentals respectively as 
an indication of the ratio existing between assessed 
valuation and selling value. 

* An exhibit of these specimen cases in detail will be found in Appendix H, 



1 8 THE A B C OF TAXATION 

Based upon the foregoing ratio, the following con- 
servative estimate of the gross land value of Boston is 
submitted for scrutiny and criticism: 

A CONSERVATIVE CALCULATION OF BOSTON'S GROUND RENT 

If the assessed valuation* of Boston's land 

for 1907, which is in round numbers . $653,000,000 

Is five-sixths of its selling value, then the 

addition of one-fifth . . . . 130,600,000 

Would give us as the net selling value . . $783,600,000 

Adding to this the capitalised value of the 

amount of tax now on the land, $15.90 

per thousand on $653,000,000, or 

$10,382,000 at twenty years' purchase . 207,600,000 

Would give us as the true capitalised ground 

rental value. . . . . $991,200,000 

Add moderate estimate for franchises, say . 108,800,000 

And we should have as a basis of assessment 

under the single tax a total capitalised 

ground-rental value of at least. . . $1,100,000,000 

At 5 per cent this would indicate for Boston 

a ground rent of . . . . . $55,000,000 

or considerably more that double the total taxes 
of Boston.f 

♦The official figures are: 

Valuation Rate Tax 

Land $652,995,300 $15.90 $10,382,700 

Buildings 417,869,400 I 5-9° 6,646,200 

Personalty 242,606,857 15-90 3> 8 57>435 

fc>WA7*>SS7 $20,886,335 
f Boston's income from taxation for 1907 was: 

Land values ......... $10,382,628 

Buildings and other improvements ...... 6,644,121 

Personal estate . . ' ..... 3*857,449 

Polls 369,966 

Corporation taxes ........ 1,087,793 

Liquor licences ......... 1,079, 5^5 

Boston's total city tax (including state tax) .... $23,421,542 



GROUND RENT A SOCIAL PRODUCT 19 

Even if $5,000,000 be deducted from this $55,000,000 
for error in estimate, there will still be left $50,000,000, 
or more than double the amount of present taxes. 

It is believed that sufficient reason is found for taking 
in taxation five-tenths, instead of two-tenths, in the 
fact that since ground rent is a social product its taxa- 
tion is in no way a burden upon business or industry. 

Having now finished the special task of trying to 
explain ground rent in its leading features, it is a 
privilege to offer a few words of tribute — and sugges- 
tion — to those landlords who are open to a discussion 
of this vexed question of taxation. 

Next to that of the farmer, the province and function 
of the landlord would seem to be one of the greatest 
in its importance to his fellow-men. The farmer is 
the commissary of subsistence ; the landlord is quarter- 
master of the camp. The farmer feeds the world; 
the landlord houses the world. Besides being the 
natural housers and the natural tax gatherers, the 
landlords are also the natural assessors. "Nobody 
runs after the assessor to tell him what property is 
worth. Everybody runs after the landlord to tell 
him what his land is worth." With this triple respon- 
sibility and privilege of housing and tax collecting and 
tax assessing, landlords ought to be, as, if they paid 
all the taxes, they would be, the natural guardians of 
the public treasury against wastefulness and mis- 
application, for the simple reason that ground rent, 
while increased by every wise outlay, is decreased by 
every unwise expenditure. 

There remain to be considered five points of special 
application to the landlord's interest, viz. : 

The taxation of real estate only; the tax imposed by 



20 THE A B C OF TAXATION 

time; corresponding exemptions; the exemption of 
assessed value; and the single tax as an income tax. 

VIII.— The Taxation, of Real Estate Only 

Every single taxer, no doubt, may be relied upon to 
vote for the concentration of ail taxes upon real estate 
(land and buildings), as a rapid transit measure toward 
his preferred exemption of buildings also. Such a 
course would secure a basis for honest assessment and 
collection, and would eliminate the possibility of 
evasion, but how much of an advance would this be 
toward a just equalisation of the burden? The land- 
lord of a new building would still be paying, as he does 
now, the taxes of an adjoining landlord of old buildings 
or of none at all. He would be worse off by his dis- 
proportionate share of taxes transferred from personal 
property. 

If Smith owns land and buildings in equal amount he 

will pay, for each $i ,000 of land, taxes upon . . $2,000 

If Jones owns land with worthless buildings, or none 
at all, he will pay, for each $1,000 of land, taxes 
upon ........ 1,000 

If Brown owns his own house, worth three times as 
much as his land, he will pay, for each $1,000 of 
land, taxes upon ...... 4,000 

Under the theory that taxes are absorbed in main- 
taining the value of the land, as indicated by the equal 
or even greater price that land often commands when 
practically unimproved rather than improved, it is 
held that the proportion of advantage afforded by the 
public outlay is fairly represented by the value of the 
land. If this theory is sound, then neither Smith, who 
pays twice as much as Jones, nor Brown, who pays 
four times as much, has any greater command per 



GROUND RENT A SOCIAL PRODUCT 21 

$1,000 than has Jones over the facilities afforded by 
society for the promotion of private business. 

IX.— The Tax Imposed by Time 

A representative real estate man of Boston has said 
that the lifetime of the best new buildings in the city 
cannot be figured to exceed two score years, and that 
with swiftly accelerating changes they will have to 
give way in forty years to a new and better order. 
Granting these facts, if during the forty years the new 
buildings shall yield to the landlord interest upon their 
cost and i\ per cent annually for depreciation, he is 
at no disadvantage from the necessity of tearing down 
and building greater, while both labour, which builds 
buildings, and business, which uses buildings, will be 
greatly benefited by such a process. What a paradise 
any American city might be made if built over new 
every forty years! Yet the users of the buildings 
can well afford to pay 2} per cent a year for such 
a luxury. 

Any sensible readjustment and equalisation of 
taxation should take this annual depreciation directly 
into account as a tax imposed by time upon all pro- 
ducts of labour, a tax so heavy as to seem an instant 
excuse for exempting them from all other taxes. 

On the other hand, while time is engaged in the 
destruction of the building, it is occupied in the con- 
struction of the land value. 

A conspicuous example of the contrariety of this 
time agency is found in the biography of a once modern 
building that in 1870 supplanted a colonial residence 
which for several years previous to 1809 was the 
residence of John Quincy Adams. 



22 



THE A B C OF TAXATION 



AN OBJECT LESSON 

Growth of Land Values vs. Decay of Buildings 



The Hotel Boylston, S. E. corner of Boylston and Tremont Streets, Boston, 
known also as the Charles Francis Adams Building, on the site of the present 
Hotel Touraine. 



Valuation 




Labour 



1. Labour constructs the building as a basis of taxation. 

2. Labour pays its taxes, insurance, and repairs. 

3. Labour, at the end of twenty-five years, builds a new building in place of 
the old one which has entirely disappeared; that is, it renews the very basis 
itself of taxation for another twenty-five years. 



< 


ff* 


p 




eg, 

J* » 


O 
O 


O 




O 





THE LAND 

Increased in value in twenty-five years 

more than threefold 



Land 

1. Land starts with a basis made by other people's labour. 

2. Land apparently pays its taxes at same rate as the building, but pays no 
insurance or repairs. 

3. Land, at end of twenty-five years, has increased its basis threefold through 
other people's labour, and its income in proportion. Under the present 
crooked system, the distribution of untaxed wealth is according to special 
privilege; its taxation, according to ability (i. e., according to production). 
Under straight single tax it would be the very reverse. The distribution would 
be according to ability (i. e., according to production) while taxation would be 
according to special privilege. It is this right-about-face in taxation to which 
this illustration is addressed. 



GROUND RENT A SOCIAL PRODUCT 23 

The inequality of the present system of taxation is 
apparent in the following calculation (based upon the 
above assumption of 2J per cent depreciation) 
regarding the land and buildings of Boston for 
the last twenty years, bearing in mind, that it is not 
the rent, either of buildings or land, that is under 
consideration, but only the effect of taxes and deprecia- 
tion upon the one, and the opposite effects of taxes 
and appreciation upon the other. 

BUILDINGS 

The valuation of Boston's buildings in 1887 

was $223,000,000 

If time's annual tax or depreciation of 2! per 

cent (besides the city's tax of ij per cent 

which is paid by the owner only when he is 

also the tenant) has been for twenty years 

50 per cent or ...... 111,500,000 

Then the value of same buildings in 1907 is only $111,500,000 

LAND 

The valuation of Boston's land in 1887 was . $322,000,000 
Time's average net annual appreciation has 

been (after paying city's tax of i| per cent) 

for each year 5 per cent and for twenty years 

more than 100 per cent or .... 331,000,000 

And the value of the same land in 1907 is . $653,000,000 

Thus the increase in the valuation of land 
in twenty years is nearly 50 per cent more 
than was the valuation of all the buildings 
twenty years ago. 

Five per cent on this twenty years' increase of 
$331,000,000 would be $16,650,000, which, added to the 
$4,300,000 assessed upon the land in 1887, would he 
$20,900,000, as compared with Boston s taxes of 
$21,254,000 in 1907. 

Those who agree with John Stuart Mill that it would 
be sound public policy and no injustice to land owners 



24 THE A B C OF TAXATION 

to take for public purposes the future increase in ground 
rent will be interested to note what an opportunity for 
putting such a plan in operation in Boston is shown by 
the above figures to have been lost twenty years ago. 

X. — Corresponding Exemptions 

In any calculation of the effect of the imposition of 
all taxes upon ground rent, it must be borne in mind 
that the landlords, who are the owners of the ground 
rents, also own buildings and other improvements upon 
the land, together with a large per cent of the personal 
property, so that they, as a class, would find the 
additional tax upon their land offset by the exemption 
of buildings and personal property. 

XI. — The Exemption of Assessed Values 

One reason why, under a just system of taxation, 
large-hearted landlords would cheerfully offer their 
necks to the tax yoke is the fact that so far as concerns 
their investment in land most of them are now privileged 
to be entirely exempt. In other words, the present 
tax is not a tax burden upon them, even though this 
fact is not to their prejudice. But while it is true that 
the capitalised value of any tax on land is deducted 
from its selling price, and that any purchaser, after the 
tax is once imposed, gets his land tax free,* so that 
the landowners of Boston who have bought their 
holdings since the present tax rate was reached are 
practically exempt from taxation, it is also true that 

*A tax, as a first lien, is practically a first mortgage to which any regular 
mortgage must be second. The effect of the tax in the first case and the 
mortgage interest in the second case upon the selling value of land is exactly 
the same. When the State imposed a tax of $10 upon a lot of land hitherto 
untaxed and worth $1,000, the effect upon the selling value was the same 
as though it had taken a first mortgage of $200, leaving to the owner as the 
selling value an equity of $800. 



GROUND RENT A SOCIAL PRODUCT 25 

the appreciation in the value of their land may be 
fairly reckoned as an offset to the imposition of any 
new tax upon it. 

This present exemption, however, is not offered as 
a reason for additional taxation, but rather as a 
justification for taking the opportunity to transfer 
the present load from the head and the tail to the back 
and shoulders of the horse. As an anti-single-tax 
professor of political economy happily puts it: "The 
beauty, to my mind, of a tax upon land values is that 
in a few years nobody pays it." 

XII.— The Single Tax as an Income Tax 

An income tax has always been a favourite form of 
tax, because it has been regarded as well calculated to 
bear upon " each according to his ability." The taxa- 
tion of ground rent would surely be the purest possible 
exemplification and application of the principle of the 
income tax, because it would fall upon all those in- 
comes which are unearned, which are in their nature 
perpetual, and which are amply able to bear the 
whole burden of taxation. Of course, such an income 
tax should have impartial application. A large un- 
earned income should be taxed at the same rate as a 
small income of the same nature and derived from the 
same source. If it is right that corporations or other 
aggregations of capital should engage in business 
enterprises for profit upon equal terms with indi- 
viduals, then it is right that an impartial income 
tax should impose at least the same rate upon the 
many million dollar incomes of the railroads and the 
coal operators, and United States steel companies, 
as upon smaller unearned incomes of one, five, or 
ten thousand dollars, derived from the same source. 



26 THE A B C OF TAXATION 

If eight hundred and fifty industrial combinations or 
trusts have a capital stock of nine billions, of which 
five billions are represented by common stock — and 
that common stock, water — it means that every i per 
cent ($50,000,000 ) or every 5 per cent ($250,000,000) 
received in dividends on this common stock is, as an in- 
come from rent, unearned by the people who receive it. 
An income from special privilege is usually part and 
parcel with an income from rent, and, as such, belongs 
to the class of unearned incomes. As ground rent 
is a social product, its private appropriation is a special 
privilege, which affords large private profit at public 
expense. Why not, then, at least tax such a privilege 
upon what it is worth? 

The gross income of the owners of the land of 

Boston in the form of ground rent is . . #55,000,000 

Or $90 per capita. 

And there is now taken in taxation only . . 10,300,000 

Hence the amount that is distributed annually 
in unearned incomes (if rent is an unearned 
income) is #44,700,000 

This amount is equivalent to $75 per capita for the 
600,000 population, or to $375 for each of the 120,000 
families of five persons each. 

Boston's total taxes for the year 1907 amounted to 
$40 per capita. If all of this $40 had been taken from 
the above $90 there would still have been left to the 
landlords $50 of ground rent per capita (equivalent to 
$250 for each of the 120,000 families), besides the 
exemption of $660,000,000 of buildings, personal 
property, and polls. 

Is it even apparently fair to let so much common 
wealth escape taxation at the expense of individual 
wealth? 



GROUND RENT A SOCIAL PRODUCT 27 

The fifty-five millions are, we submit, the "income" 
in very truth earned by the city and people of Boston 
— created by their actual labour and actual expendi- 
ture. Under the single tax Boston would pay all its 
current expenses out of this legitimate $55,000,000 
income of its own, earned by itself, instead of allow- 
ing four-fifths, or $45,000,000, of this amount to be 
divided, through the channel of special privilege, into 
unearned incomes, thus aggravating those inequalities 
in distribution of wealth which people are wont to 
declaim against as partial and wrong. 

While that part of the ground rent of Boston that 
goes to individuals may be said to be unearned by 
them, the whole of it can hardly be said to be unearned, 
because, having been produced by society, it may 
truthfully be said to be earned by society, and hence 
it may go to it as its wages, just as properly as his 
earnings go to the individual who works for wages. 
If a railroad has the special privilege of a monopoly 
in the transportation of coal from the Pennsylvania 
coal mines, or in the transportation of people, why 
not tax the railroad in proportion to the value of its 
franchise? The private monopoly of a natural 
resource is a special privilege. If the private owner- 
ship of the two or three billion tons of unmined anthra- 
cite coal is a special privilege, why not tax it what 
others would give for the privilege of mining and 
marketing it, thus making all the people sharers in 
what is called a natural bounty? If the private appro- 
priation of a billion dollars' worth of iron ore is a 
special privilege, would it not be "proportionate and 
reasonable" for its owners to pay in taxation one- 
half at least of the value of that privilege? It is 
becoming common to scold about trusts and monopo- 



28 THE A B G OF TAXATION 

lies, coal barons, oil magnates, and railroad kings, 
but many people do not think of the perfectly natural 
resort of taxing them to the same extent that other 
people are being taxed. 

This bugbear of monopoly is the central point 
at which numberless palliatives are ineffectively aimed. 
Taxation, it will be found, is the only "power to 
destroy" what there is of wrong, and the only "power 
to build up" what is right in these conditions. 

XIII. — The Opinions of Economists 

Concerning the first generic peculiarity of land, 
the following statements gleaned from some of the 
world's greatest thinkers in the field of economics 
and public finance, who, however, have approached 
the subject from another point of view, support the 
contention of this chapter that the value of land is a 
social product: 

" Both ground rents and the ordinary rent of land are a 
species of revenue which the owner, in many cases, enjoys 
without any care or attention of his own. Though a part of 
this revenue should be taken from him in order to defray the 
expenses of the State, no discouragement will thereby be given 
to any sort of industry. The annual produce of the land and 
labour of the society, the real wealth and revenue of the great 
body of the people, might be the same after such a tax as before. 
Ground rents, and the ordinary rent of land, are, therefore, 
perhaps the species of revenue which can best bear to have a 
peculiar tax imposed upon them. 

" Ground rents seem, in this respect, a more proper subject 
of peculiar taxation than even the ordinary rent of land. The 
ordinary rent of land is, in many cases, owing partly at least to 
the attention and good management of the landlord. A very 
heavy tax might discourage too much this attention and good 
management. Ground rents, so far as they exceed the ordinary 



GROUND RENT A SOCIAL PRODUCT 29 

rent of land, are altogether owing to the good government of the 
sovereign, which, by protecting the industry either of the whole 
people, or of the inhabitants of some particular place, enables 
them to pay so much more than its real value for the ground 
which they build their houses upon; or make to its owner so 
much more than compensation for the loss which he might 
sustain by this use of it. Nothing can be more reasonable than 
that a fund which owes its existence to the good government of 
the State, should be taxed peculiarly, or should contribute 
something more than the greater part of other funds, toward 
the support of that government." — Adam Smith, " Wealth of 
Nations" Book V., Chapter II., Part 2, Art. I. 

"The ordinary progress of a society which increases in 
wealth is at all times tending to augment the incomes of land- 
lords; to give them both a greater amount and a greater propor- 
tion of the wealth of the community, independently of any 
trouble or outlay incurred by themselves. They grow richer, 
as it were in their sleep, without working, risking, or 
economising." — John Stuart Mill, "Principles of Political 
Economy," Book V., Chapter II., Sec. 5, Par. 2. 

" Ground rent is the advantage accruing to landowners from 
the use of certain uncreated or socially created powers and 
utilities connected with land, including, besides mere fertility 
of soil, also mineral wealth, water privileges, location, etc. 

"Let a considerable number of human beings settle in a 
new country: special value instantly attaches to particular 
localities, and this with no act of creation save the act of the 
people in coming there. . . . Such dearness, springing 
though it does from a sort of human agency, is not the product 
of conscious doing on the part of any one person. In bringing 
it into being, A, B, and C were instruments, not agents." — 
Andrews, "Institutes of Economics," p. 168, and footnote. 

"The utility of a piece of land may be increased by the 
natural growth of the community, when no labour is exerted 
directly to increase the usefulness of the particular tract of 



3° 



THE A B C OF TAXATION 



ground." — Bullock, " Introduction to the Study of Economics" 
p. 116. 

"The growth of the city occasions unusual expenditures; the 
growth of the city also creates unusual values. Why should 
not the values which the city creates go to bear the expenses 
which the city occasions ? 

" The volume of traffic on a street railway increases with the 
increase in municipal population, and the receipts of the 
company on this account grow more rapidly than do the operat- 
ing expenditures which the increased traffic occasions. . . . 
Now it is this income to which a franchise tax should address 
itself. . . . One might, then, say that by means of the 
franchise tax the State taxes its social earnings from the capital 
which it has created, but which for reasons of public policy it 
assigns to private parties for administration." — Adams, 
"Science of Finance," pp. 504. and 380. 

XIV. — Conclusion 

Throughout this chapter the impelling aim has 
been to invite and promote the understanding of 
ground rent, an agency clear to few, very obscure to 
many, but as subtle and powerful in the social orga- 
nism as is the life-blood in the human organism. 

Legislatures and Congresses are prevented by incon- 
venient distance from revising and improving the 
planetary laws, but they busy themselves with the 
enactment of statute after statute designed to keep 
men and women in their natural orbits. Discerning, 
as we surely do, a natural law in the material world, 
established by a Law-giver greater than any state or 
nation, we urge simply a repeal one by one of all 
artificial tax laws, putting upon the statute book 
instead a single one — an enacting clause to this 
natural law — under which every American city may 
begin at once to administer the single tax remedy. 



Chapter II 



B 



THE SECOND GENEKIC PECULIAKITY OF LAND 

A TAX UPON ECONOMIC RENT CANNOT BE 
SHIFTED 

A TAX UPON GROUND RENT CANNOT BE SHIFTED UPON 
THE TENANT BY INCREASING THE RENT. IF IT 
COULD, THE SELLING VALUE OF LAND WOULD NOT 
BE REDUCED, AS IT NOW IS, BY THE CAPITALISED 
TAX THAT IS IMPOSED UPON IT 

THE question is whether, if a new tax should be 
put upon land, the owner would not escape by 
adding it to his tenant's rent? 

It is not a sufficient answer to quote the authorities: 
the query still remains, what are the arguments upon 
which the authorities rely? Following is an attempt 
at the clear statement which these arguments deserve. 

Ground rent, "what land is worth for use," is deter- 
mined, not by taxation, but by demand. Ground 
rent is the gross income, what the user pays for the 
use of land; a tax is in the nature of a charge upon 
this income, similar to the incumbrance of mortgage 
interest. It is a matter of every-day knowledge that 
even though land be mortgaged nearly to its full value, 
no one would think for a moment that the owner could 

3 1 



32 THE A B C OF TAXATION 

rid himself of the mortgage interest that he has to pay 
through raising his tenant's rent by a corresponding 
amount. Mortgage interest is a lien held by an 
individual; similarly a tax may be clearly conceived 
as a lien held by the State. Both affect the relation 
between the property owner and lien holder; neither 
has any bearing upon the relations between owner and 
tenant. "Tax" is simply the name of that part of the 
gross ground rent which is taken by the State in taxa- 
tion, the other part going to the owner; the ratio these 
two parts bear to one another has no effect upon the 
gross rent figure, which is always the sum of these two 
parts, viz., net rent plus tax. The greater the tax, the 
smaller the net rent to the owner, and vice versa. 
Ground rent is, as a rule, "all the traffic will bear"; 
that is, the owner gets all he can for use of his land, 
whether the tax be light or heavy. Putting more tax 
upon land will not make it worth any more for use, will 
not increase the desire for it by competitors for its 
tenancy, will not increase its market value. 

To illustrate, let us consider the case of a piece of 
land for which the landowner gets $i ,000 rent from the 
man who uses it. 

First: The owner, let us say, pays over to the city 
in taxes $100 of this $1,000 rent. Is there any indi- 
cation that this $100 tax has any influence in fixing 
the present rent at $1,000? 

Second: Let us suppose that next year the city 
decides to take another $100 of the $1 ,000 rent in taxes. 
Could the owner then add the $200 tax to the tenant's 
rent, making it $1,200? 

Third: Let us suppose that the following year the 
tax is increased by another $1 00 and so on, by an annual 



RENT TAX CANNOT BE SHIFTED 33 

increase, until, for extreme illustration, the tax is 
$1,000, an amount equal to the entire rent; would such 
a condition make it possible for the owner to raise his 
tenant's land rent to $2,000? 

These questions would seem to answer themselves 
in the negative, and thus bring us to a fair conclusion 
in the matter. 

What the Authorities Say of This Second 
Generic Peculiarity of Land, That a Tax 
upon Its Rent Cannot Be Shifted 

"The weight of authority upon such a question is worthy of 
attention, although by no means decisive. Now, while a few 
respectable and sincere students of economic science hold to the 
doctrine of transferability of the ground-rent tax to the tenants, 
no one will dispute that an overwhelming weight of authority 
both in numbers and in reputation, scout that doctrine as 
absurd. Not only the entire school of Ricardo and Mill, but 
also nine-tenths or more of other economic writers make it a 
fundamental doctrine of their science that such a tax never can 
be transferred to tenants." — Thomas G. Shearman, "Natural 
Taxation" pp. I2Q-IJ2. 

"Though the landlord is in all cases the real contributor, the 
tax is commonly advanced by the tenant, to whom the landlord 
is obliged to allow it in payment of the rent." — Adam Smith, 
"Wealth of Nations" Book V. 9 Chapter II., Part 2, Art I. 

"A land tax, levied in proportion to the rent of land, and 
varying with every variation of rent, is in efFect a tax on rent; 
and such a tax will not apply to that land which yields no 
rent, nor to the produce of that capital which is employed on the 
land with a view to profit merely, and which never pays rent; 
it will not in any way affect the price of raw produce, but will 
fall wholly on the landlords." — Ricardo, "Principles of Political 
Economy and Taxation" McCulloch's edition, p. 107. 



34 THE A B C OF TAXATION 

"A tax on rent would affect rent only; it would fall wholly on 
landlords, and could not be shifted. The landlord could not 
raise his rent, because he would have unaltered the difference 
between the produce obtained from the least productive land in 
cultivation, and that obtained from land of every other quality." 
— Ricardo, "Principles of Political Economy and Taxation," 
Chapter X., Section 62. 

"A tax on rents falls wholly on the landlord. There are no 
means by which he can shift the burden upon any one else. 
. . . A tax on rent, therefore, has no effect other than its 
obvious one. It merely takes so much from the landlord and 
transfers it to the State." — John Stuart Mill, "Principles of 
Political Economy," Book V., Chapter III., Section 2. 

"The power of transferring a tax from the person who actually 
pays it to some other person varies with the object taxed. A 
tax on rents cannot be transferred. A tax on commodities is 
always transferred to the consumer." — Thorold Rogers, 
"Political Economy," 2nd edition, Chapter XXI., p. 285. 

"A land tax levied in proportion to the rent of land, and 
varying with every variation of rents . . . will fall wholly 
on the landlords." — "Walker, "Political Economy," edition of 
188 J, p. 4.13, quoting Ricardo approvingly. 

"A tax laid upon rent is borne solely by the owner of land. ,, 

— Bascom, Treatise, p. I$Q. 

"Some of the early German writers on public finance, such as 
Sartorius, Hoffman, and Murhard, went so far as to declare 
that, because of this capitalisation, a land tax is no tax at all. 
Since it acts as a rent charge capitalised in the decreased value 
of the land, they argue, a land tax involves a confiscation of the 
property of the original owner. On the other hand, since the 
future possessors would otherwise go scot free, it becomes 
necessary to levy some other kind of a tax on them." — E. R. A. 
Seligman, "Incidence of Taxation" p. 1 39. 



RENT TAX CANNOT BE SHIFTED 35 

"The incidence of the ground tax, in other words, is on the 
landlord. He has no means of shifting it; for, if the tax were 
to be suddenly abolished, he would nevertheless be able to 
extort the same rent, since the ground rent is fixed solely by 
the demand of the occupiers. The tax simply diminishes his 
profits." — E. R. A. Seligmariy "Incidence of Taxation," pp. 
244, H5- 

"If land is taxed according to its pure rent, virtually all writers 
since Ricardo agree that the tax will fall wholly on the land- 
owner, and that it cannot be shifted to any other class, whether 
tenant-farmer or consumer. . . . The point is so 
universally accepted as to require no further discussion. . . . 
A permanent tax on rent is thus not shifted to the consumer, nor 
does it rest on the landowner who has bought since the tax 
was imposed." — E. R. A. Seligman, "Incidence of Taxation" 
pp. 222, 22s. 

'With these assumptions, it is quite clear that the tax on 
economic rent cannot be transferred to the consumer of the 
produce, owing to the competition of the marginal land that 
pays no rent, and therefore no tax, nor to the farmer, since 
competition leaves him only ordinary profits. 

The amount of each particular rental depends upon units 
of surplus produced (varying to any extent according to the 
superior natural conditions), and on the marginal price, which 
is independent of these superior conditions, and accordingly, 
a tax that strikes the surplus only, remains where it first falls." 
— "Nicholson, "Principles of Political Economy," Book V., 
Chapter XL, Sections I and 4. 



Chapter III 



c 



THE THIED GENEKIC PECULIARITY OF LAND 

THE SELLING VALUE OF LAND AN UNTAXED 
VALUE 

EVERY LANDOWNER IS EXEMPT FROM TAXATION ON 
HIS INVESTMENT, TO THE EXTENT OF THE TAX 
TO WHICH HIS LAND WAS SUBJECT AT TIME OF 
HIS PURCHASE, AND THEREFORE, PRACTICALLY 
SPEAKING, NEARLY ALL LAND IS TO-DAY OWNED 
FREE OF ANY TAX BURDEN 

The purpose of the following illustration* is to 
make clear by means of iteration and reiteration 
two facts, viz. : 

Fact I. The land ownerf of to-day who has pur- 
chased since the present tax was imposed escapes 
taxation upon his investment. 

Fact 1 1. The burden of a land tax cannot be made 
to survive a change of ownership. 



* The statements and arguments used in this illustration deal only with the 
general principles of taxation, and assume such conditions as prevail in the 
United States, including for instance, lack of universality and uniformity in 
taxation. Single tax terms and arguments are studiously excluded. 

•j-'Care is taken to designate owner and user in their respective capacities, 
whether they be two persons, or two combined in one. 

36 



VALUE OF LAND AN UNTAXED VALUE 37 

The illustration is intended to show the effect in a 
normal or advancing community of mortgage interest 
and taxes upon the market value and cost to the user 
of a lot of land and a house respectively having equal 
purchase and rental value., and each subject to the 
same mortgage interest and taxes. 

first: the land 

Proposition 1. — Let it be supposed thai you want a 
piece of urban land that is worth $300 a year to you for 
use. You can afford to pay $300 a year and no more, 
and it can be had at an annual cost of $300 a year. 

Let us then proceed to acquire this piece of land, 
exercising diligence and caution to profit by each step 
in the transaction. 

(a) At the very outset the question arises, what is 
the thing for which you are proposing to pay $300? 
Surely it is not the soil itself, because it is a question 
of a building site, which could be had out in the country 
for little or nothing. It is not merely the area upon 
which to dig a hole in the ground, wall it about, and 
erect a building, for the same space can be had else- 
where for a song. In short, it is not the earth's sur- 
face; it is not the inherent capabilities of the soil; 
it is not light and air, or other bounties of nature 
resident in that lot of land; it is not natural 
resources of which you are thinking as worth to 
you $300 a year. 

(b) But what you are going to pay for is the accom- 
panying and incidental use of a great many expensive 
things outside of the piece of land, things which you 
will need and must have, which you cannot afford to 



38 THE A B G OF TAXATION 

provide at your own expense, but for the use of which 
you can afford to pay in proportion as you use them. 
It is these outside things, available by their proximity, 
for which you are called upon to pay $300 a year. 
To enumerate some of them specifically, they are, in 
a town or city lot, right and ease of access to water, 
health inspection, sewerage, fire protection, police, 
schools, libraries, museums, parks, play-grounds, steam 
and electric railway service, gas and electric lighting, 
telegraph and telephone service, subways, ferries, 
churches, public schools, private schools, colleges, 
universities, public buildings — utilities which depend 
for their efficiency and economy on the character of 
the government; which collectively constitute the 
economic and social advantages of the land; and 
which are due to the presence and activity of popu- 
lation, and are inseparable therefrom, including the 
benefit of proximity to and command of facilities for 
commerce and communication with the world — an 
artificial value created primarily through public 
expenditure of taxes. In practice, the term "land" 
is erroneously made to include destructible elements 
which require constant replenishment; but these 
form no part of this economic advantage of situation 
or site value. 

(c) In other words, you are to pay $300 a year for the 
value of what the law calls the " rights and privileges 
thereto pertaining," specified in every deed of land 
conveyance. This $300 is ground rent, "what the 
land is worth for use." 

Proposition 2. — Assuming this piece of land to be 
free from all charges and incumbrances, and assuming 
the current rate of interest to be 5 per cent per annum, 



VALUE OF LAND AN UNTAXED VALUE 39 

you would -purchase the lot for $6,000, because interest 
upon that sum would amount to the stipulated §300 a 
year. But if, on the contrary, the lot hears a mortgage 
of §2,000, upon which the annual interest charge is $100, 
then the lot will cost you §4,000. 

(a) The mortgage interest charge of §100 reduces 
the selling price of the land by the amount of the mort- 
gage, §2,000, and you will buy the land, not at §6,000, 
but at §4,000, the value of the equity remaining after 
mortgage interest has been paid. 

(b) By purchasing title you will assume the mort- 
gage and will pay the mortgage interest, §100, but 
that §100 will not come out of your §200, the net 
income from your investment of §4,000; it will come 
out of the gross income, the ground rent, §300. It is 
a part of, and not an addition to, the ground rent. 
You will pay the interest, but you will not bear it, 
because you will have bought yourself clear of the 
burden. 

(c) The lot will thus cost you annually for use, 
interest on your purchase price (§4,000 at 5 per cent) 
§200, plus mortgage interest (§2,000 at 5 per cent) 
Si 00, equal in all to §300, all that the land is worth 
for use, use being the only relation of land to man with 
which economics has reasonable concern. 

Proposition 3 . — But, besides being subject to a 
mortgage of §2,000, assume further that this lot of land 
is subject also to an old tax* of §100, which charge the 
purchaser must also assume. You will then purchase 
the land not at §4,000, but at §2,000. 

(a) As already seen, the mortgage interest charge of 

* By the term "old tax" is intended the tax in force at time of last purchase; 
by "new tax" one imposed since last change of ownership. 



40 THE ABCOF TAXATION 

$100 reduces the selling price of the land by the amount 
of the mortgage, $2,000. It is equally true that the 
tax charge of $100 reduces it by the same amount, 
$2,000; the mortgage and the tax together therefore 
reduce it by $4,000; and you will buy the land at 
$2,000, the value of the equity which remains after 
both mortgage interest and tax have been paid. This 
$2,000 is the capitalisation of the annual value of the 
lot to you after all charges have been met. 

(b) In purchasing you will assume both mortgage 
interest and tax and will pay them, but you will pay 
them out of the gross income of $300, and not out of 
the net income of $100 from your investment of $2,000. 
Therefore no part of the $2,000 which you pay for 
the equity will be taken from you in taxation, either 
as principal or interest. 

(c) The lot of land will thus cost you for use: in- 
terest on your purchase price ($2,000 at 5 per cent), 
$100; plus mortgage interest ($2,000 at 5 per cent), 
$100; plus taxes, $100; and these together aggregate 
$300, what the land is worth for use, the same as before. 

(d) It follows then that, under the present system, 
assuming free competition, the selling value of land 
is an untaxed value,* and land owners who invest 
to-day are exempt from taxation — not indeed upon 
their land, but upon its annual net or income value 
to them, or, in other words, upon their investment. 
The gross value is the taxed value. The net value is an 
untaxed value. 

(e) As this exemption of the present owner holds 

* Assessors make use of the selling value of land as the basis for their levy 
because it is more easily ascertainable than the gross value, but in reality and 
effect the levy is upon the gross value, which, if land were not taxed at all, 
would be also the selling value. 



VALUE OF LAND AN UNTAXED VALUE 41 

true to-day, so it will be true in future of each new 
purchaser subsequently to the imposition of any new 
tax. It is in the very nature of things that the burden 
of a land tax cannot be made to survive a change of 
ownership. 

(/) This is equally true of a bond, but it is assumed 
that a tax levy should be not upon intangible stocks and 
bonds legally conceived as property, but only upon 
tangible goods and estates. It is, to be sure, just as 
true that a man who builds a house to rent pays no 
tax on his investment, but for a different reason. The 
tax, in that case, is shifted upon the user in increased 
house rent, except so far as, by discouraging building, 
it is reflected in lower wages for building. But an old 
tax upon the land is a burden neither upon present 
owner nor user. The tax on land is "absorbed," 
that on the house is " shifted/'* 

(g) We cannot too soon or too rigidly fix in mind the 
fact that this ground rent of $300 is the governing 
factor in the situation; that it is a tax laid not by the 
State but by nature, which every man must pay for 
the use of land, either to a private owner as rent, or to 
the State as a tax, or to both. No statute or ordi- 
nance can increase or reduce, exempt from, or abolish 
the payment of this "economic rent," or ground rent, 
to somebody. Its amount is neither fixed nor affected 
by the tax that is put upon it, whether large or small. 
Taxing it cannot increase it; cannot decrease it; cannot 
abolish it. Its amount may always be calculated 
by this simple formula: ground rent equals interest 

* Landlords who own and let both land and tenement houses, apartment 
houses, and business blocks thereon, escape the burden of the tax on their 
land, and at the same time shift upon their tenants the building tax, thus 
avoiding all share in the tax burden. 



42 THE A B C OF TAXATION 

on purchase price, plus interest on any mortgage, plus 
taxes. 

Proposition 4. — Neither a tax upon ground rent, nor 
the ground rent itself, adds anything to the cost 0} land 
for use. 

(a) Economic rent, ground rent, measures the value 
of all public, quasi-public, and social service. If the 
whole ground rent is not a burden, but merely an 
equivalent for social values received, neither can interest 
and taxes, two of the parts of which ground rent in our 
illustration is composed, be a burden upon the user. 
A tax upon rent comes out of rent, which, as has been 
explained, is the natural tax that every user has to 
pay to some one, and hence it subtracts nothing from 
wages and adds nothing to the cost of living. 

Proposition 5. — You cannot pay $6,000 for the land 
and in addition pay either the mortgage interest o/$ioo 
or the tax of $100, because that would make land cost 
you $400 per annum which by our assumption is worth 
only $300. 

(a) The tax upon land cannot be added to the ground 
rent — which is kept at its maximum by market 
demand — but is a part of, and must come out of, 
ground rent. If it could be added, that fact would 
itself indicate that the ground rent was $400 instead of 
$300, which is contrary to supposition. Land worth 
only $300 a year cannot be made worth $400 a year by 
putting a tax of $100 upon it. 

(b) Let it not be forgotten that ground rent, in the 
sense in which the word is used, is the same homo- 
geneous thing, one and indivisible, the world over — 
what land is worth for use. It is rent — or use value 
— not cost of construction or cost of production — 



VALUE OF LAND AN UNTAXED VALUE 43 

that fixes the price of land. Economic rent is the 
initial and governing factor from which all calculations 
must proceed. 

second: the house 

Proposition 6. — The lot having been acquired, let it 
he supposed that you are in need of a house, and that 
such a house as you want would cost to build $6,000, 
or, in interest, $300 a year, the same as the annual cost of 
the land. 

(a) You will observe at once that the problem of 
the house is quite different from that of the land. The 
cost of acquiring land depends primarily upon its 
rent. Conversely, the rent of a house depends 
primarily upon its cost. Builders will not build 
houses unless they can get interest on the cost of 
construction. Competition among builders will not 
allow one builder normally to get more than interest 
on cost of construction. 

Proposition 7. — // such a house were free of tax, but 
mortgaged for $2,000, it would cost you to buy only 
$4,000, and it would cost you to use, as in case of the 
land, interest on purchase price (4,000 at 5 per cent) 
$200, plus interest on mortgage ($2,000 at 5 per cent) 
$100, making $300 as before. 

(a) The mortgage upon a house, like that upon 
land, will add nothing to the cost of the house for use. 

Proposition 8 '■ — But you find that such a house is 
subject also to a tax of $100, which you will have to pay 
in addition to the above $300, interest on purchase and 
mortgage, making the house cost you for use altogether 
$400, instead of $300 a year, or $100 more on account 
of the tax. 



44 THE A B C OF TAXATION 

(a) Unlike the tax upon land, the tax of $100 upon 
the house cannot come out of the $300 rent (house 
rent or interest) except indirectly through its effect 
upon wages as before mentioned, because house rent 
cannot normally be less than interest on the actual 
cost of building the house; it must instead be paid 
by the user of the house, over and above his interest, 
making his house rent, the annual cost of his house 
for use, $400 instead of $300. 

(b) To repeat: a house rent, otherwise $300, is 
increased to $400 by a tax of $100 on the house. In 
contrast with this, you may either take off a present 
tax of $100 from the land, or you may increase that 
tax to $200, and in neither case will the cost of the 
land to the user be affected. Take off the $ 100 tax 
from the house, and the cost of the house to the user 
will be reduced from $400 to $300 a year; of land and 
house together, from $700 to $600. 

Proposition 9. — The moral of this illustration is 
that you get for use annually $300 worth of land for $300, 
and a house costing $300 for $400. In other words, a 
tax upon land is a part of, is included in, and 
comes out of, ground rent, and is no burden to the 
user: while a tax upon a house is a clear addition 
to house rent, and comes principally out of the user 
of the house. 

To recapitulate: (1) It has been shown that a 
house tax of $100 that has been regularly levied 
takes in taxation $100 a year of the user's income. 

(2) It has been shown that a land tax of $100 
takes in taxation no part of the income of the user or 
present owner, provided that he purchased the land 
after the tax was imposed. 



VALUE OF LAND AN UNTAXED VALUE 45 

The beauty of this illustration is that (in a classi- 
fication which excludes duplication by certificates or 
mere legal evidences of property, like stocks, bonds, 
etc., and includes only actual tangible property) 
while land stands as always for everything except the 
products of labour, a house is here made to stand as 
the representative of any and all products of individual 
labour, that is, for everything except land, and the 
illustration thus becomes all inclusive. 

If you have had the patience to follow it under- 
standing^ you may rest assured that you have mas- 
tered a basic principle of taxation, and have solved one 
of the most perplexing problems of political economy. 

What the Authorities Say of This Third Generic 
Peculiarity of Land, viz., That Its Selling 
Value Is an Untaxed Value. 

"The land tax, which is next on the list, should equally cause 
but little controversy. It is persistently claimed as a burden 
upon land, or land owners; but this will not bear scrutiny when 
we inquire out of whose income the tax is paid, or what way it 
causes pressure, so that its reduction or abolition would be a 
benefit to the community. 

"As a fixed charge upon land for generations, it is now past all 
controversy a rent-charge. In many instances it has long since 
been redeemed, the property having subsequently changed 
hands; in others, inheritors of property have acquired it under 
the burden, and have calculated their income minus the tax, 
while purchasers, in buying, invariably allow for it. To reduce" 
(abolish ?) "it now would be to present the landowners of 
England with a capital sum of nearly £"30,000,000. Their 
estates, relieved of the burden, would become at once so much 
more valuable, and if they did not sell, they would pocket an 
additional income which they never inherited or paid for." — Sir 
Robert Gijfen, "Essays in Finance" First Series, p. 24.2. 



46 THE A B C OF TAXATION 

"But whatever may be thought of the legitimacy of making 
the State a sharer in all future increase of rent from natural 
causes, the existing land tax (which in this country [England] 
unfortunately is very small) ought not to be regarded as a tax, 
but as a rent-charge in favour of the public; a portion of the 
rent, reserved from the beginning by the State, which has never 
belonged to or formed part of the income of the landlords, and 
should not, therefore, be counted to them as part of their taxation, 
so as to exempt them from their fair share of every other tax. 
As well might the title be regarded as a tax on the landlords; 
as well, in Bengal, where the State, though entitled to the whole 
rent of the land, gave away one-tenth of it to individuals, retain- 
ing the other nine-tenths, might those nine-tenths be considered 
as an unequal and unjust tax on the grantees of the tenth. That 
a person owns part of the rent does not make the rest of it his 
just right, injuriously withheld from him. The landlords 
originally held their estates subject to feudal burdens, for which 
the present land tax is an exceedingly small equivalent, and for 
their relief from which they should have been required to pay a 
much higher price. All who have bought land since the tax 
existed have bought it subject to the tax. There is not the 
smallest pretence for looking upon it as a payment exacted from 
the existing race of landlords. 

"These observations are applicable to a land tax only in so 
far as it is a peculiar tax and not when it is merely a mode of 
levying from the landlords the equivalent of what is taken from 
other classes. In France, for example, there are peculiar 
taxes on other kinds of property and income (the mobilier and 
the patente), and supposing the land tax to be not more than 
equivalent to these, there would be no ground for contending 
that the State had reserved to itself a rent-charge on the land. 
But wherever and in so far as income derived from land is 
prescriptively subject to a deduction for public purposes, beyond 
the rate of taxation levied on other incomes, the surplus is not 
properly taxation, but a share of the property in the soil, reserved 
by the State. In this country there are no peculiar taxes on other 



VALUE OF LAND AN UNTAXED VALUE 47 

classes, corresponding to, or intended to countervail, the land- 
tax. The whole of it, therefore, is not taxation but a rent- 
charge, and is as if the State had retained, not a portion of the 
rent, but a portion of the land. It is no more a burden on the 
landlord, than the share of one joint tenant is a burden on the 
other. The landlords are entitled to no compensation for it, 
nor have they any claim to its being allowed for, as part of their 
taxes. Its continuance on the existing footing is no infringe- 
ment of the principle of equal taxation." — Mill, "Principles 
of Political Economy" Volume II., Book V.> Chapter II. , 
Section 6. 

"A more difficult and disputable point arises in connection 
with the incidence of a long continued land tax. Here it is 
said that the tax is really a deduction from property. As land 
is sought for its revenue, what lowers its revenue lowers its 
selling price, and therefore a land tax falls altogether on the 
possessor at the time of its imposition. Subsequent acquirers 
take the land subject to the burden, and pay a lower price in 
consequence. This process of "amortisation," as it has been 
called, makes the subsequent removal of the tax undesirable; 
the persons who have lost by its establishment are not the same 
as those who gain by its remission. A purchaser has got land 
cheaper, and gains a further advantage by escaping the tax; 
in fact he is allowed for it twice over, once at the time of purchase 
and again at that of remission. 

"The element of truth in this theory, which has received much 
favour, appears to be the following: (i) as previously pointed 
out, when a land tax becomes definitely fixed so that it can be 
foreseen, or even capitalised and redeemed, there is no inaccuracy 
in speaking of it as a charge on land, which lowers its selling 
price; it is just the same as a mortgage, and is so regarded by 
purchasers." — Bastable, "Public Finance" (1903), page 440 

"If a certain tax islevied and it is expected that itwill continue 
to be levied indefinitely in the future, it will reduce the selling 



48 THE A B C OF TAXATION 

value of the land by the amount of the capitalised value of the 
tax. The future owner will, therefore, be able to buy it so much 
cheaper that he will realise as large a percentage on his invest- 
ment as though the tax had never been levied." — Thomas N. 
Carver, Tale Review, Nov. i8g6. 



A recent College and University text book* makes 
reference to the argument of this illustration, as re- 
stated in Chapter XII., in the following comment: 

Many present-day followers of Henry George find in this 
principle of amortisation at once a justification and a method of 
securing for society all economic rent. Under present condi- 
tions, they say, a man who buys land wholly escapes taxation 
upon it. Consequently, in order to make landowners pay as 
much as other people we should have to increase the tax upon 
land by a rate equal to that paid by the average tax payer as 
often — say every thirty years — as the land of the community 
changes holders. In this way the State could gradually and with 
justice absorb all economic rent. 

But this whole chain of reasoning is fallacious for three 
reasons: 

(a) This capitalisation takes place only to the extent 
that the tax on land is exclusive and unequal, and modern 
taxes upon land are not of this nature. 

(b) In so far as this programme of the single taxers were 
anticipated and understood, it would visit the whole burden 
of the " reform" upon present owners, instead of being dis- 
tributed over several generations. Subsequent purchasers 
would discount these periodic increases of the tax and pay to 
owners for their land only the present value of the rapidly 
vanishing income from land. Land would be valued simply as 
a terminable annuity. 



*" Outlines of Economics," Revised Edition, by Richard T. Ely. The 
Macmillan Company, 1908, pp. 621, 622. 



VALUE OF LAND AN UNTAXED VALUE 49 

(c) This whole doctrine overlooks the inevitable con- 
sequence that, if "the selling value of land is an untaxed value" 
and "if the burden of a land tax cannot be made to survive 
a change of ownership," these facts would so increase 
the demand for land that the profits from its purchase 
and ownership would not exceed profits in other lines of 
investment." 

Let us examine these points one by one. 

(a) It is, as I understand, admitted by all econo- 
mists that in the United States (the country now under 
consideration) the tax on land is everywhere exceed- 
ingly unequal, and, especially in the large cities, almost 
exclusive. 

Either the capitalisation of the land tax is a fact or 
it is not. If it is a fact it is, with its corollaries, the 
most vital fact of all those bearing upon the material 
welfare of the race, and ought not to be brushed aside 
in three short unsupported sentences like the above, 
all of which are substantially contrary to the mass of 
evidence assembled in these chapters. 

But the capitalisation of the land tax in the United 
States is a settled fact, and hence not debatable; a 
business condition of every-day knowledge in the buy- 
ing and selling and assessment of land. It is out of 
the domain of theory, and not dependent upon any 
abstract speculation concerning an exclusive and 
unequal tax. 

For the sake of illustration : First. Let it be assumed 
that there are two, and only two, fields open to 
investment, viz., land paying 5 per cent on purchase 
price and bonds paying 5 per cent on purchase price 
(because either by exemption or by evasion they es- 
cape taxation) . What is it that fixes the above rate 



50 THE A B C OF TAXATION 

of 5 per cent prevailing to-day in both cases? Is it not 
supply and demand? When there is a surplus of capital, 
rates are depressed; when a scarcity of capital, rates 
are advanced. The question is, What and how has 
taxation to do with this 5 per cent rate of interest? 

Again : Let it be assumed that a way has been found 
to exact from all bonds a tax of $25 per thousand, or 
one-half the income. Inviting investment, there would 
then be, land paying 5 per cent, bonds paying i\ per 
cent, and what would happen? If the interest rate is 
5 per cent owners of bonds will continue to hold them 
for an income of 2 \ per cent or they will sell at approxi- 
mately half price, but as loans are renewed borrowers 
will have to pay the market rate of interest, what 
capital is worth for use, plus the tax. The rate of 
interest will still be fixed, as now, by supply and de- 
mand, and not by taxation. What has taxation to 
do with the general interest rate more than with the 
gross ground rent of land? The idea that if a uniform 
rate of tax were imposed and collected from all incomes 
it would lower the rate of interest is admitted to be 
highly speculative and seems to find contradiction in 
every money market. As to the statement that mod- 
ern taxes upon land are not virtually exclusive and 
unequal, how can this possibly be true when the 
alleged bane of the present system is that more than 
three-quarters of personal property escapes taxation? 

(b) The proposed plan of "some of the present-day 
followers of Henry George" is set forth in the same text 
book in the main correctly, and admirably, as above, 
except that their specific recommendation is limited 
to absorbing only enough economic rent to meet all 
public expenses, an object which might be accom- 



VALUE OF LAND AN UNTAXED VALUE 51 

plished gradually and almost imperceptibly in one 
generation. The execution of this particular plan 
would involve an increase of only fifty cents per thous- 
and in the tax rate annually for thirty years, or one 
generation. In other words, each one thousand dollar 
selling value would be decreased by fifty cents capital- 
ised, or ten dollars each year. Thus in thirty years the 
rate would reach the present average, say of fifteen 
dollars per thousand, and would, if the land did not 
meantime increase in value, reduce its selling value in 
thirty years by three hundred dollars to seven hundred 
dollars. 

But if a thirty-year bond is at a premium, and 
worth one hundred and fifteen dollars to-day, and 
will be worth only one hundred dollars or par at 
maturity, does the whole burden of the vanishing 
fifteen dollars premium fall upon the "present 
owners"? The new million dollar office building will 
probably be worth little or nothing in three generations, 
but this whole burden of ninety years natural decay is 
not visited upon "present owners." The immediate 
reduction of $ 10 a year (1 per cent or one point on 
the stock board), in value of 1 1,000 would not greatly 
depress selling value, while taxes and depreciation of 
ten, twenty, or thirty years hence are very slightly 
discounted to-day. 

Therefore, the assertion that the above programme 
of adding gradually $15 to the tax rate upon land in 
the next thirty years "would visit the whole burden of, 
the reform upon present owners" is erroneous and 
confusing, especially when the burden of a three hun- 
dred dollar thirty years' depreciation is offset by an 
appreciation of perhaps more than $1 ,500 (as is the case 



52 THE A B C OF TAXATION 

in Boston) which offset is rightfully a part of the 
economic situation. Many laws, tariff laws among 
others, do not pretend to insure against sporadic cases 
of possible injustice, but the universal law remains 
that, with civilisation, the value of land increases. 

(c) The statement of the book on this point comes 
far short of covering the actual condition. The facts 
that the "selling value of land is an untaxed value" 
and that "the burden of a land tax cannot be made to 
survive a change of ownership" have indeed so increased 
the demand for Boston land that in value probably 
more than three-quarters of it is to-day in dead hands, 
or in the hands of trustees and syndicates which can- 
not die, all of whom refuse to loosen their grip upon 
this "preferred stock" except at exorbitant speculative 
prices which would yield income far under other lines 
of investment. 



PART II. 

THREE BOSTON OBJECT LESSONS 
IN TAXATION 

Chapter IV. 
Winter Street and the Single Tax. 

Chapter V d 
Washington Street and the Single Tax. 

Chapter VI. 

CORNHILL AND THE SlNGLE Tax. 



Chapter IV 
FIRST BOSTON OBJECT LESSON 

WINTER STREET AND THE SINGLE TAX* 

SHOULD THERE BE A NORMAL RATIO BETWEEN THE 
VALUE OF LAND AND THE VALUE OF BUILDINGS? 



THE following text, diagram, pictures, and tables 
are designed to illustrate the absurd ratio 
existing between the values of land and buildings, 
and the possible application of the single tax principle 







yVINTER 


J^sn 


£=*? f 


ZK-9. 





Gi 

<*> 




ft 

5 


c. 


so 5 














\ 



MAP OF WINTER STREET SHOWING ESTATES NUMBERED 

Total area of lots 83,522 square feet, or one and eight-tenths acres. Total 
length of street 485 1 feet. The numbers in small figures on this plan are 
the street numbers; the numbers in large figures are the square feet of 
area in each lot. 



* The statements contained in this chapter are adapted from an address at 
a banquet given by the Massachusetts Single Tax League in the Hotel Vendome, 
October 5, 1899, to Representative Business Men of Boston. This was the tenth 

55 



56 THE A B C OF TAXATION 

to one of the most important business thoroughfares 
in the heart of the shopping district of Boston, an 
impressive lesson in the inequalities of the present 
system of taxation. 

In this and the following object lessons the valua- 
tions, unless otherwise noted, are those of 1907. The 
total valuations on both sides of Winter Street includ- 
ing the estates on the Tremont and Washington Street 
corners were : 

LAND 



1898 
1907 


$5,142,600 
8,272,000 


$61.57 P er s q- ft- 

97.50 per sq. ft. 

BUILDINGS 


$2,681,989 per acre 
4,247,100 per acre 


1898 
1907 


$675,000 
605,200 


$8.08 per sq. ft. 
7.13 per sq. ft. 


t 353>836 per acre 
310,582 per acre 



Showing for nine years an increase of 58 per 
cent in land, and a decrease of 1 1 per cent in 
buildings. 

The assessed valuation of the estate at the southwest 
corner of Winter and Washington Streets (Fig. I), was 
in 1907, $557,000, of which $19,400 was for buildings. 
The land alone, 1,955 square feet, increased from 
$342,000, $175 per square foot, in 1898, to $537,600, 

banquet in a series of seventeen given by the League during the years 1897-1903 
to the following bodies: (1) Patrons of Husbandry; (2) Association of 
Massachusetts Assessors; (3) Labour Organisations; 4) Massachusetts 
Woman's Suffrage Association; (5) New England Free Trade League; 
(6) The Massachusetts Clergy; (7) Young Men's Christian Association; 
(8) Boards of Charities and Corrections; (9) Representative Taxationists; 
(10) Representative Business Men; (11) Twentieth Century Club; (12) 
Real Estate Men; (13) The Catholic Clergy; (14) Members Boston Merchants' 
Association; (15) Political Economists; (16) Professional Economists; (17) 
Landlords of Boston, followed by (18) A Dinner-Discussion of the Economic 
Club of Boston, and (19) Lorimer Hall, Finale. . 



FIRST BOSTON OBJECT LESSON 57 

$275 per square foot, in 1907. This assessed valuation 
of $275 per square foot for land is the highest in Boston. 
In 1893 the estate had been sold for 1350,000. The 
present building was erected in 1881, but it is no 
distinct improvement, in height or otherwise, over 
its predecessor. Is it reasonable that the owner 
of this land should in fourteen years realise an 
increase on his investment of 59 per cent ($207,000 
on $350,000), and business reap little apparent 
advantage in accommodation during twice or thrice 
that time? 

In 1907 the estate was paying the owner an income 
of about $25,000. The Transit Commission took this 
estate by eminent domain, and settled for it in 1908 for 
$630,000 or $320 per square foot for the land and build- 
ings. After appropriating subway station accommo- 
dations, it leased the balance of the estate for the 
sum of $28,000 a year and taxes, or $36,000 as long 
as no taxes are assessed. This is a return of about 
4i per cent net on the purchase price of $630,000, 
on which sum the city is paying — as the money was 
borrowed — about 4 per cent. 

What Better Buildings Mean 

Query. Is it not a fact that with up-to-date 
buildings, having ample rear courts for the receipt 
and shipment of goods, business might be far better 
accommodated, and Winter Street be made 20 feet 
wider in the bargain? Would not up-to-date build- 
ings on Winter Street at least double the business 
accommodations, and hence be equivalent to doub- 
ling the area of the land? 

The limited land space of Winter Street commands 



58 THE A B C OF TAXATION 

a high price because its area cannot be increased. 
The limited floor space of Winter Street com- 
mands a high average price because its area has 
not been increased. 

How Capital Is Handicapped 

Query. If capital is the friend of labour why 
does it not build better buildings on Winter Street? 
Simply because it cannot get at the land. The land 
owner, being unable or indisposed to build, and unwill- 
ing to sell his land, there is no inducement to capital 
to put up lasting buildings to be forfeited at the end 
of the lease. When business from compulsion builds 
for itself in this way, it puts up the cheapest building 
that will answer for the time being, instead of what 
is best for all time. The one hundred and seventy- 
five or more concerns on Winter Street are in the 
merchandise, and not in the building, business. Such 
building is exceedingly disadvantageous to large con- 
cerns and impossible to small ones. 

Query. Were the land holder and the business man 
of Winter Street "created free and equal"? The 
extensive alterations and improvements in Shepard, 
Norwell Co.'s stores (Fig. Ill), as in many other cases, 
have been paid for by the tenants, who have also paid 
all taxes on them. At the expiration of the usual 
twenty-year lease, all these improvements revert to 
the owners of the land. Is it fair that the land 
owner should, in the disposal of his land, have 
the benefit of the sharpest kind of competition, 
while the business man is debarred from all kind 
of competition in the obtaining of new buildings? 
Is it not about time that all Winter Street build- 



FIRST BOSTON OBJECT LESSON 59 

ings should, in a comprehensive sense, be "altered 
to suit tenants"? 

A Striking Illustration of a Common Fact 

The land in Winter Street, which was assessed at less 
than $4 per square foot in 1850, was assessed in 1907 
at $130 per square foot. During the fifty-seven 
years intervening, the income, above taxes, from 
the land, in rent and appreciation has amounted 
to an average of 150 per cent annually on the 
investment of 1850. 

Three Burdens for Business and None for the 
Landlord 

Query. Is that a constitutionally "just and 
reasonable" system of taxation which constrains 
the business man of Winter Street to erect at 
his own expense a basis of taxation, pay the 
tax itself, and then turn over without consider- 
ation the very basis itself to the pocket and 
profit of another man? Should not the land be 
taxed until it is at least as profitable to use it as 
to hold it out of use? 

Leading Questions 

Query. Why should not Winter Street, with its 
concentrated business and highest land values in 
Boston, have the best buildings, with the best attain- 
able equipment, elevators, ventilation, heat, light, 
water, sanitation, etc.? 

Query. Wherever business has up-to-date accom- 
modations, as in the Exchange Building on State 
Street and the new Tremont Building on Tremont 



60 THE A B C OF TAXATION 

Street, is it not a fact that the value of the buildings 
approximately equals or exceeds the value of the 
land? Should not the value of the buildings at least 
keep some sort of pace with the increasing value of 
the land? It is not asserted that Winter Street ought 
to have buildings worth, like the land, $97.50 per 
square foot, but that $7.13 per foot is too low and 
means a great detriment to business. 

Query. If estate holders in their quest of profits 
had been as dependent on buildings as on land during 
the past forty years, would Winter Street, the centre 
of business and of highest land values, ever have 
lacked building accommodations of a value approx- 
imating much more closely to that of the land than 
has been the case? 

Query. If the income from the land of Winter 
Street, including appreciation, were no greater than 
the income from up-to-date buildings, would the 
business of Winter Street tolerate to-day its seventh- 
rate accommodations? 

Query. Was the land of Winter Street made for 
the use of business or for the speculative profit of the 
land owner?* 

Is the business of land owning pure and simple 
deserving of so much consideration as to merit encour- 
agement at the expense, and to the detriment, of 
industry and enterprise? If not, is not the present 
system of exempting it from the burden of taxation 
unwise and indefensible? 

A modern eight story building covering the 



* By land owner is meant any man in his capacity as owner of land only, 
independently of his capacity as owner of buildings and improvements or 
anything else. 



FIRST BOSTON OBJECT LESSON 61 

location of A. Stowell & Co. (Fig. VI) would afford 
to business four times as much floor space as 
now at one-quarter the present average rental per 
square foot. 

The ground rent of 5 per cent on $130, the assessed 
valuation, would be $6.50 per square foot. The 
rent of a building eight stories in height, costing $50 
per square foot, would be $2.50 per square foot, mak- 
ing ground rent and rent of building together $9 per 
square foot. Subtracting from this $9 three-quarters 
($6.75) for ground floor and basement, there is left 
for the remaining seven floors $2.52 per square foot, 
or 32 cents per square foot for each floor. Upon the 
area of 4,630 square feet at $6.75 per square foot, 
this means a total rental for ground floor and 
basement of 131,253, and for the other seven floors 
110,417, or an average of $1,488 each. This 
figure is probably much under what such floors 
would actually command. 

This estate occupied by A. Stowell & Co. costs 
the city of Boston just as much in the way of 
public service as it would with the finest possible 
building. It is this constant expenditure for public 
service that maintains the value of the land, while 
adding nothing to the value of the buildings. 
Further, maintenance is not all. The present value 
of the land has been paid for, dollar for dollar, by 
the people of Boston. Why should not this estate 
pay taxes in proportion to the taxes that are spent 
upon it? 

Query. Is it reasonable that the business of A. 
Stowell & Co. should be required to pay $30,000 
ground rent (5 per cent on $600,000 worth of 



62 THE A B C OF TAXATION 

land) in order to secure floor space worth 
$12,000 a year? 

What Does the Business Man Think of It ? 

The following facts and figures are given for business 
men to consider, being careful to avoid hasty con- 
clusions, and to remember that the more nearly the 
value of buildings approaches the value of the land 
the better it appears to be for business. 

Comparison by Counties 

Massachusetts has fourteen counties. In every 
one of thirteen of these counties the assessed value 
of the buildings exceeds and in most cases largely 
exceeds the assessed value of the land. In the one 
other county, Suffolk (Boston, Chelsea, Revere, and 
Winthrop), containing 49 per cent of the whole land 
value of the state, the buildings fall far below the land 
in value. 

The Small Towns 

Again, eighty-eight towns (out of Massachusetts^ 
354 cities and towns), having lowest valuations, show 
average assessments as follows: of buildings, $130,000; 
of land, $145,000. A single tax assessment based 
upon site value of uncultivated land and exempting 
not only buildings, but all other farm improve- 
ments, would reduce this average land value for 
these eighty-eight towns, so far as they represent 
farm land for assessment, from $145,000 to prob- 
ably less than $75,000. The following figures show 
Winter Street in company with the three smallest 
of these towns: 



FIRST BOSTON OBJECT LESSON 63 





BUILDINGS 


LAND 


RATIO 


Mashpee 


#46,530 


$140,020 


33-IOO 


Peru 


22,680 


84,825 


27-IOO 


Florida . 


30,790 


119,246 


25-IOO 


Winter St., Boston . 


605,200 


8,272,000 


7-IOO 



For the County of Suffolk, which contains the City 
of Boston, as well as for the state, no such discrepancy 
appears. Following are the figures: 



County of Suffolk 
Other 13 counties 

Whole state . . 



BUILDINGS LAND 

$444,441,725 $673,208,750 
949,283,781 679,071,599 



RATIO 

66-100 
140-100 



#1,393,725,486 #1,352,280,349 101-100 



Twelve Cities and Towns 

In the twelve following large 
value of the buildings greatly 
land. 

Lenox .... 
Pittsfield . . . 
North Attleborough 
Gloucester . . 
Haverhill . . . 
Lawrence . . . 
Lynn .... 
Holyoke . . . 
Springfield . . 
Cambridge . . 
Lowell . . . 
Newton . . . 



cities and towns the 
exceeds that of the 



BUILDINGS 

$2,306,500 

8,685,715 

2,4H,2IO 

9,388,650 

12,392,900 

22,854,800 

29,892,705 

18,194,860 

37,188,415 

49,245,700 

33,293,590 

27>59°>325 



£i>73i,375 

6,971,255 

1,256,613 

7,886,470 

9,772,050 

18,587,850 

23,238,785 

15,456,380 

36,13^445 
39,989,600 
26,389,020 
22,878,475 



RATIO 
133-100 
I24-IOO 
I9I-I00 
I 19-100 
126-100 
I23-IOO 
I28-IOO 
I I 7-100 
IO3-IOO 
I23-IOO 
120-100 

120-100 
120-100 



Total. . . . #253,445,430 $210,289,318 

Seventeen Cities and Towns 

In the following seventeen cities and towns, repre- 
sentative of their class, the valuation of the buildings 
is in the average double that of the land: 



6 4 



THE A B C OF TAXATION 









BUILDINGS 


LAND 


RATIO 


Athol ...... $2,324,908 


$1,204,097 


I93-IOO 


Clinton . . 






4,246,230 


1,967,307 


2I5-IOO 


Abington . . 






1 5 749> 6 97 


634,610 


275-100 


Plymouth . . 






. 5>477>025 


2,206,250 


248-IOO 


Amherst . . , 






1,839,225 


899,535 


204-100 


Chicopee . . 






6,115,900 


2,221,270 


275-100 


Amesbury. . 






. 2,841,815 


1,397,681 


203-100 


Newbury port 






. 5,269,850 


2,379,600 


221-100 


Adams. . . 






. 2,598,950 


1,085,300 


239-IOO 


North Adams 






7,257,210 


4,827,075 


150-100 


Attleborough 






5,479,385 


3,474,395 


I58-IOO 


Taunton . . 






11,024,365 


5,214,520 


2II-I00 


Easthampton 






3,412,906 


408,720 


836-IOO 


Rockland,. . 






2,346,35 


891,323 


263-IOO 


Chelsea . . 






14,600,570 


8,922,300 


163-IOO 


Blackstone . 






1,244,065 


760,410 


163-IOO 


Gardner . . . 






3,767,096 


i,395,6i8 


270-100 



Total . 



,595,727 #39,89°, 011 205-100 



An Enormous Discrepancy 

Query. Why is the value of the buildings 
on Winter Street, $605,200, so insignificant as 
compared with the land value of Winter Street 
$8,272,000? Is it not because the present system 
of taxation (by making partly improved real 
estate the choicest of all investments ) enables the 
owner to get on such an investment a far larger 
percentage of revenue, with buildings thirty to 
sixty years old? 

Under the present system the buildings of 
Winter Street yield in taxation only about one- 
thirteenth as much as the land, so that with 
the very moderate advance in rate from $15.90 
to $17 per thousand upon the land alone of 
Winter Street its business might to-day have 
thirteen times as good accommodations in untaxed 



FIRST BOSTON OBJECT LESSON 65 

buildings, and the city lose nothing in taxes from 
that locality? 

A Tax That Defeats Itself 

Query. Do not the above questions indicate not 
only that the taxation of buildings has defeated itself 
by discouraging the increase of buildings to be taxed, 
but also that the city is deprived of a much larger 
revenue by thus preventing the large increase of land 
value in the whole neighbourhood adjoining, which 
would follow the erection of eight million dollars 
worth of buildings on Winter Street? 

Winter Street is the centre of the highest land values 
of Boston. It is 485 J feet, or less than one-tenth of a 
mile, in length. It has two subway stations of dif- 
ferent lines, one at the Washington Street and one 
at the Tremont Street end. The city is spending eight 
or ten millions for these subways, besides other mil- 
lions annually to provide shopping facilities for a 
million people. The result here is $8,000,000 worth of 
land value for the benefit mainly of the land owners of 
Winter Street, and $600,000 worth of shopping accom- 
modations for the people. Is the result pleasing or 
profitable? 



Chapter V 
SECOND BOSTON OBJECT LESSON 

WASHINGTON STREET AND THE SINGLE TAX* 

IN VIEW of the nature of ground rent as already 
considered there is one way that promises to 
simplify and equalise taxation, viz., by beginning at 
once the gradual transfer of the burden to shoulders 
by which eventually it will not be felt, thus tending 
to correct the distribution of wealth, abolish strikes, 
silence the clamour against monopoly and special 
privilege, and sweep from before the halting wheels 
of social and moral progress much of the degradation, 
distress, and vice precipitated to-day upon society 
by want on the one hand and surfeit on the other. 

Men who have large selfish interests often prove 
themselves just as open to conviction of fairness and 
soundness as those who have small selfish interests. 
So far as the case is made plain to them their judgment 
generally will be impartial. No business interest, for 
instance, is more keenly sensitive to crooked taxation 
than is the real estate business; none quicker to take 
alarm at the sound of hostile legislation. No one 
would claim, and few would allow, that to justify a 
reform it should be shown to be to the pecuniary 

* This chapter is adapted from an address at a banquet given by the Massa- 
chusetts Single Tax League to Representative Real Estate Men in the Hotel 
Brunswick, Boston, October 8, 1900. 

66 



SECOND BOSTON OBJECT LESSON 67 

advantage of any one class of men over another; yet 
it is not difficult to conceive how, in the relief of houses 
and stores and factories from taxation, the real estate 
business would get a large share of betterment from 
the change. 

Herewith is offered a collection of facts and defini- 
tions, coupled with a few simple statements, calcu- 
lations, and deductions, criticism of which is invited. 
These take the form of observations, purposely dis- 
jointed in order that a connection dropped may not be 
a connection lost. It is hoped that in the consider- 
ation of these points a sufficient vantage ground of 
agreement may appear from which to begin at once 
gradually to supplant the bad with the good, the 
crooked with that which is straight, the unattainable 
and indefensible with that which is practicable, simple, 
and near at hand. 

The assessed valuation of Washington Street, from 
Adams Square to Eliot Street, 3,495 feet, or two- 
thirds of a mile in length, with an area of 745,003 
square feet, 17^ acres, comprising 179 estates, was 
in 1907: 

Land .... $61,135,900 '$77.00 per square foot 
Buildings . . . 10,793,200 $13.50 per square foot 

This is an increase in valuation, over the year 1898, 
of land, 120,438,400, or 50 per cent; of buildings, 
$1,955,100, or 20 per cent. In 1899 the valuation of 
the buildings was 21 J per cent that of the land; in 
1907, only 17J per cent. 

The property, land and buildings, yields to the 
city, in taxes at $15.90 per thousand, $1,143,672. 
By an increase of $2.80 in the rate, with all buildings 



68 THE A B C OF TAXATION 

exempted, the land alone would yield the same amount, 
($61,135,900 at $18.70 equals $1,143,672). 

Some Pertinent Illustrations 

There are on this street, between Adams Square 
and Eliot Street, 179 buildings, twenty-one of which 
have been erected in the last twenty years. At this 
rate Washington Street is confronted with the happy 
prospect of buildings of modern beauty and con- 
venience in only a trifle more than one hundred and 
seventy years, provided only that none of them 
grows old meantime. Has not fifty years been the 
limit of a useful life for the average building of the 
past? If so, Washington Street should have three 
full crops of new buildings, instead of one, in the 
one hundred and seventy years. 

All nature renews itself and comes out in a new 
dress once a year. The more the land is enriched, 
the more fertile the agricultural crop. Why is there 
not found the richest economic crop of buildings on 
land richest in value? Is not something "rotten in 
Denmark"? If so, what is it? 

The human body, as man's habitation, is renewed 
once in seven years, cuticle and all. Of Boston's 87,300 
buildings 1,657 were erected in 1907. If one-half , or 
828, of these are due to a natural growth of less than 
1 per cent annually (the annual increase in population 
is over 2 per cent), and only one-half are to renew old 
buildings already enumerated, then it will take at this 
rate upwards of one hundred years to scrape off the 
surface scurf, and give to Boston a fresh and healthy 
cuticle. It will require these one hundred years even 
if every new building is proof against decay. 



SECOND BOSTON OBJECT LESSON 69 

Meantime, where is the builder's occupation gone? 
Is this health for a body politic? If not, will some 
wise physician furnish a prescription? 

Do the $23 1 ,600 worth of nearly worthless buildings 
shown in Fig. IX represent those business interests 
of Boston for which a Washington Street subway 
is being completed ; for which a Tremont Street parallel 
subway was completed only a few years since, and 
but one square away? These subways add nothing 
to the value either of these old buildings or of the new 
ones which might replace them. Yet they soon will 
have doubled the value of the land. 

It is submitted in all honesty and seriousness that 
this Washington Street, from Adams Square to Eliot 
Street, is a veritable economic monstrosity. When- 
ever any section of a city is in a state of transition, 
like the West Street and Temple Place of a generation 
ago, or like the Summer Street of to-day, altered fronts 
and other makeshift devices are for a time natural 
and inevitable. But here in Washington Street, for a 
couple of centuries the main business artery of a great 
city, there are not on its whole length more than three 
or four buildings which you could point out with 
special pride to the visitor from Chicago, or Kansas 
City, or Marblehead, or Cape Cod. For this condition 
there must be a cause, and this cause is the private 
appropriation of a public value; a value publicly 
created, and publicly maintained. If this is not the 
cause, we ask you to help us find what is. 

Query. Is it the Old Corner Bookstore (Fig. VIII), 
now almost two hundred years old, valued at $2.62 
per square foot, that needs a new Washington Street 
subway? Is Washington Street land at $50 to $300 



70 THE A B C OF TAXATION 

per square foot a proper place for this and a hundred 
other similar tombstones? 

The economic, or ground, rent of this estate is not 
(probably) what the present tenant pays for the use 
of the land with its worthless buildings, but is what 
such use would command in connection with an up-to- 
date building. This gross ground rent is at least 5 
per cent on 1730,000 (the assessed valuation), 
$36,500, plus present taxes on the land, $2,035, or 
$38,535. Whatever the user receives in return for 
the annual payment of this ground rent or natural 
tax (be it $38,535, or more or less), he receives from 
the city and people of Boston. The owner, as owner, 
to whom this rent is paid, gives him nothing in return. 
Ought not the owner at least to pay the taxes? 

Question. Why do these worthless Washington 
Street buildings withstand the march of improve- 
ments? Labour wants to put up better buildings. 
Capital wants to invest in better buildings. Business 
wants to occupy better buildings. 

Answer. The reason is that a building investment 
involves labour and business risk, while land 
investment does not; and further that people are 
not only permitted to hold this land practically 
unimproved, but are actually paid handsomely for 
doing so. 

Query. Is it not a fact that the business of Wash- 
ington Street would be better accommodated to-day 
if every alternate square were covered by an up-to- 
date eight or ten story block, with open parks or 
even market gardens in the intervening squares? 

Ground rent is whatever amount a user pays, or 
would be willing to pay, annually, for the use of the 



SECOND BOSTON OBJECT LESSON 71 

land itself. It is whatever is paid for the use of a 
whole property, land and buildings, less taxes, insur- 
ance, and repairs, and a fair interest on the value of 
the buildings. When new buildings, or extensive 
alterations are made by the tenant which are to revert 
to the landlord at the end of say a twenty years' lease, 
then one-twentieth of this outlay becomes a part of 
the annual ground rent, because it forms a part of the 
price paid for use of the land. Ground rent is simply 
"a premium paid for the advantage of location; it 
is the value of the special privilege of the occupancy 
of a particular spot of land to all of which all men 
have an equal right, but from which all but one are 
and must be excluded." To tax this value of land 
is no burden upon the user, because he can get a better 
living by using this land, after paying the rent, than 
by using some other land that nobody wants, and 
that hence has no rental value. 

The Transit Commission took the estate, northwest 
corner of Washington and Boylston Streets (Fig. X), 
by eminent domain for subway purposes, and the expert 
estimates of its value ran as high as $625,000, or $587 
a square foot ; the Commission conveyed the property 
back, allowing the owner as compensation for the res- 
ervation of the basement and part of the ground floor 
for transit purposes, $150,000, a sum only $17,000 
less than the assessed valuation of the whole estate, 
besides interest and an allowance of $10,000 toward 
necessary reconstruction of the building. While 
this is a very complicated case, and the owner, a well- 
known Boston merchant, claims that the sum received 
by him for damages does not compensate him fully 
for the diminution in the value of the estate, the facts 



72 THE A B C OF TAXATION 

certainly show that the property was greatly under- 
assessed. 

Boston's Ground Rent $55,000,000 

In the estimate, offered in Chapter I, page 18, is 
clearly shown the all-sufficiency of ground rent to 
bear the whole burden of present taxation. Criti- 
cism of these figures, with fair consideration of the 
process and steps of the calculation, will be welcome. 

The $55,000,000 ground rent of Boston is. the 
natural tax which the people of Boston pay for the 
occupancy and use of their land. This, it is sub- 
mitted, is tax enough for them to pay. But, since 
only $10,382,628 of this natural tax is taken for public 
purposes, while $44,617,372 is permitted to be absorbed 
into private incomes, by the " private appropriation 
of ground rent/' the people of Boston have to pay 
an additional tax of $13,038,914 on buildings, personal 
property, and polls, with the result that the occupancy 
of their land, with its benefits of good government and 
public service, costs the people of Boston to-day in 
round numbers:* 

The natural tax of $55,000,000 

An unnatural tax (on buildings, personal property, 

and polls) of 13,038,914 

Total burden of taxation .... $68,038,914 

Of its ground rent, estimated as above at . . $55,000,000 

Boston now takes in taxation less than two-tenths, 

or $10,382,628 

While Boston's whole tax is much less than five- 
tenths, or $23,421,542 



* Credit for this simple formula of great convenience in dealing with taxation 
in any locality is due to Mr. James R. Carret, a Boston lawyer and conveyancer. 



SECOND BOSTON OBJECT LESSON 73 

The assessed valuation of the Ames estate (Fig. XI) 
is: land, $654,500, or $115 per square foot; buildings, 
1469,500, or I75.32 per square foot. The tax upon the 
land is no burden upon the owner, because he 
purchased only the equity after payment of tax. 
(See Chapter III.) Neither does he bear the burden 
of the tax on the building, because he can shift it 
upon his tenants, who do. This fact no one disputes. 

Howland Street (Fig. XIII) — thirty-two well-to-do 
homes — has an average assessed valuation : land 
(8,275 feet, at 51 cents per foot), $4,220; houses, 
$6,371, 77 cents per foot; houses and land, over 
$10,000. 

The valuation of the land and office building of 
the Ames estate is equivalent to that of the land and 
houses of about three Howland Streets. The latter 
would pay taxes on $1,015,500, at $15.90, or $16,146, 
while the owners of the Ames estate escape the 
burden of the tax on both land and buildings, 
neither of which can they be made to bear. 

The estate, corner of Cambridge and Charles Streets 
(Fig. XII), taken by the city of Boston in 1899 for 
an approach to the Cambridge bridge, was at that 
time assessed, land $69,600; buildings, $3,400. The 
commissioners' award was $170,000, or $97,000 in 
excess of the assessed valuation. This award was 
based upon the income of the property, which was 
claimed to be $8,000, or 5 per cent on a value of 
$160,000. The income of $8,000 was 11 per cent, of 
the assessed valuation of $73,000. Allowing Mr. 
Edward Atkinson's full claim, that the single tax — 
local, state, and National — would take 4 per cent of 
assessed land values, 7 per cent would still be left in 



74 THE A B C OF TAXATION 

this instance for the landowners. This may be an 
extreme illustration, but it goes to show the vicious- 
ness of the present system, and points unerringly to the 
sufficiency of ground rents for all purposes of taxation. 

Few persons now call in question the right of the 
owner of any Washington Street lot to tear down 
his building and hold his lot vacant. If one owner 
may do this all owners may do the same. Must 
there not be some fatal weakness in an apportionment 
between the rights of individuals and the rights of 
the people that would make possible such an impolitic 
condition? But the fact that modern buildings would 
be worth $50 to $75 per square foot instead of $13.50, 
the value of present buildings, is proof that most of 
this land, though not held entirely vacant, is held 
practically three-quarters to nine-tenths vacant, or, 
in other words, put only to one-quarter or one-tenth 
of its legitimate and most economical use. A public 
economy that turns a landowner from a public friend 
into a public enemy, whether he will or no, cannot 
be wise. 

If Boston should take the $4,383 received for taxes 
from the marble Sears Building on Washington Street, 
and the $7,465 from the Ames Building, and spend 
these amounts in the improvement and repair of the 
worthless buildings of Washington Street, the owners 
of the Sears and Ames Buildings would complain, and 
very justly. Exactly what the City of Boston does 
is this: It spends these same taxes in the "improve- 
ment and repair" of the land value that is under 
these and similar buildings. But is this really less 
unjust? This is one more way of looking at the unequal 
incidence of a tax on buildings. 



SECOND BOSTON OBJECT LESSON 75 

Why should the Boylston Building and the old 
Masonic Temple and the old Public Library have come 
down in their youth and beauty while these Washing- 
ton Street buildings are allowed to remain standing 
in their decrepitude? There must, we say, be some 
sufficient reason. If the reason here suggested is not 
the real one, we ask the reader what it is. 

Question. How, then, are we to know just when old 
buildings should give place to new ones? 

Answer. When the single tax shoe begins to pinch, 
that is, when, under the single tax, the old buildings 
cease to be profitable: in other words, when, upon 
land with buildings unsuited to the situation, a tax 
seems heavy which, upon the same land with proper 
buildings, would seem light. 

The Honourable Henry Winn, a well-known advocate 
of the multiple tax, says: "Why does a man owe a 
tax? First, because society protects his person; 
second, it supplies and keeps in order streets for his 
passage; third, it lights his way by night; fourth, it 
furnishes parks and libraries; fifth, it schools him 
and his children; sixth, it protects his property; 
seventh, it keeps courts open to redress his grievances; 
eighth, it provides a government to make and enforce 
laws; ninth, it supports him if he falls into poverty; 
and tenth, chiefly because he has been placed here by 
God to serve and improve, not himself alone, but 
mankind in general, and as that can only be done by 
maintaining government, order, and civilisation, he 
owes his tax as he owes his life, to support that 
government/' 

"Amen," says the single taxer; and these are 
exactly the things for which every man is paying when 



76 THE A B C OF TAXATION 

he pays his ground rent, the natural tax. Why ask 
him to pay for the same things a second time? 

The people of Boston, as hereinbefore alleged, 
actually pay in single taxation a natural tax of 
l55,ooo,ooo, coupled with an unnatural and "double" 
tax of $13,000,000, a grand total of $68,000,000. 
They receive in return benefits amounting only to 
$23,000,000. The failure to pay all public expenses 
out of this natural tax of $55,000,000 is the cause of 
gross inequality in the division of wealth, an inequality 
greatly exaggerated by the additional $13,000,000 
unnatural double tax. 

The single tax stands for the recognition of a 
scientific principle of taxation. When or how it is 
to be introduced is not for us to say. All that is 
here asked is that you shall study the problem, adopt 
the single tax principles, and then begin to apply 
them. The complaint is against a condition and 
never against an individual or a class. 

The man who, when paying his water rate, or his 
city gas bill, or city electric light bill, pays in full for 
a public service rendered to him, is not paying a tax. 
How, then, could a land owner, who, in paying his 
single tax, would pay to-day not in full, but only 
fifty cents on a dollar for the communal service rendered 
him, say that he was paying a tax, or that he was the 
victim of confiscation? 

The proposal of the single tax is gradually to 
abolish the present complex, unequal, and systemless 
method of taxation, and to defray all public expenses 
from a tax upon land values alone. This surely 
would be a simple process. It would be to distribute 
the public burden with invariable justice, because in 



•d g 




SECOND BOSTON OBJECT LESSON 77 

accordance with a natural economic law, instead of 
a variable and impossible statute law. This is all 
there is in the single tax of complexity, absurdity, 
or impracticability. 

The City of Boston is lavish of its millions in order 
that Washington Street space may yield proportion- 
ately more business, more profit, more convenience, 
and more satisfaction to people. Enterprising syn- 
dicates of men and capital are ready and watching 
to make the most of the situation. It is the unequal 
advantage enjoyed by the owners of lots small or 
large that hinders this realisation of the city's good 
intentions. This is the canker that destroys the 
city's harvest from its planted millions. 

The people tax themselves $100,000 to build a 
beautiful Milton, Dorchester, Newton, Cambridge, or 
Lynn boulevard. Then straightway the same 
people again pay interest on the same outlay in 
the form of ground rent, before they can establish 
their homes and enter into the enjoyment of their 
own benefactions. In other words, they deposit 
$100,000 in the ground, and then pay 5 per cent 
annually for the privilege of appropriating the 
interest thereon. 

Why should a city which creates the enormous 
value of its land, be powerless to insure, or even to 
facilitate, the use of it by the provision of suitable 
buildings thereon because paralysed and checkmated 
by unequal rights vested in the dead hand of cor- 
porations, trustees, and institutions. 

German cities exercise themselves about the muni- 
cipal "housing of the poor." Why should not 
American cities cast about to remove the municipal 



78 THE A B C OF TAXATION 

impediments which prevent poor and rich alike from 
housing themselves, both in private and business 
homes? 

The nature of the problem is the same in the case 
of a store on Winter Street as in the case of a house 
on Salem Street. Every argument in favour of 
municipal initiative in the renovated housing of the 
people has no less force in connection with the reno- 
vated housing of the people's business. 

If all men are to have equal rights, then the 
right of the landlord, the storekeeper, and the cus- 
tomer should not be in conflict but in harmony. 



Chapter VI 
THIRD BOSTON OBJECT LESSON 



CORNHILL AND THE SINGLE TAX* 




MAP OF BLOCK BOUNDED BY CORNHILL, BRATTLE STREET, SCOLLAY SQUARE, 
AND ADAMS SQUARE. 



Total number of square feet 

Number of lots 

Average number of square feet to each lot 

Total frontage on Cornhill, in feet 

Average frontage per lot, in feet 

Average width of block, in feet 

Width of Cornhill, in feet 

Width of Brattle Street, in feet 

Width of subway underneath 

Land, assessed value 

Buildings, assessed value . 

Land, assessed value, per foot 

Buildings, assessed value, per foot 



2 3 
931 

450 
20 

45 
48 

5° 
24 

$1,220,700 

$ 101,800 

$57 



Between Cornhill and Brattle Street, Boston, and 
facing upon both streets, are found to-day twenty- 
three houses built by Uriah Cotting for the Cornhill 

* This chapter is adapted from an address at a banquet given by the 
Massachusetts Single Tax League to members of the Boston Merchants' 
Association in the Hotel Brunswick, October 22, 1901. 

79 



80 THE A B C OF TAXATION 

Company in 1817 (Figs. XIV and XV). More than 
one hundred firms and individuals are doing business 
in these contracted quarters, in which not one of 
their number would deign to live. These estates, as 
they stand, net the owners an income of probably 
20 to 50 per cent on their original investment. With 
modern buildings they would net say 5 or 6 per cent 
on to-day's valuation of land and buildings. 

Why, we ask, should there not be a board of business 
health to condemn buildings which, like these, are 
untenable for business? As a matter of fact, a proper 
system of taxation would vacate these untenable 
buildings without the aid of any such board. If the 
erection of the Exchange Building, the Tremont 
Building, and other modern office buildings could 
empty immediately hundreds of dingy and stuffy 
offices, why would not a hundred business palaces, as 
fast as they could be built, empty the same number of 
cramped and ill-appointed stores, workrooms, and 
attics? 

If land and buildings stood on their respective merits, 
subject to equal competition, that is, accessible to 
capital and labour at the price each is worth for use, 
these buildings would quickly condemn themselves. 
Such unmerchantable material, if at sea, would follow 
the decayed frigate to some navy yard to be broken 
up. On land, if they had not been fastened to it, they 
would long ago have gone to the junkshop; but as 
they are fixed to the" land, whoever uses the land must 
use them. 

Under the best of conditions, it is sufficient for the 
city to maintain a street at the front doors of abutting 
lots, each one hundred feet deep. Here, on Cornhill, 




c 



XIII. Howland Street, Roxbury. Thirty-two well-to-do homes. 
Average assessed valuation per house and lot: land ( 8,275 square feet 
at 51 cents per square foot), $4,220, House, $6,371, or 77 cents per 
square foot; land and house together, over $10,000. 




XIV. The whole of Cornhill block, as seen from the top of the 
Pemberton Building, Pemberton Square. 




XV. Cornhill block on the right, looking up from Adams Square. 
Scollay Square subway entrance in the distance. 




XVI. St. Paul's Church, Tremont Street, near Winter. 



THIRD BOSTON OBJECT LESSON 81 

are lots averaging forty-five feet deep, having one 
forty-eight foot public street, with all its public utilities, 
at the front door, and another fifty foot street at the 
back door, equivalent to one street for abutting lots, 
each twenty-five feet deep, making the one item of 
street cost, for the accommodation of these buildings, 
four times what the highest public welfare demands. 
On the other hand, it is probable that if the buildings 
in Cornhill were new and adapted to the situation, 
they could easily accommodate four times the business 
that is done in the present area. 

With four times as much street as is needed, for one- 
quarter of the amount of business, is it not a simple 
calculation that Boston's taxes, on account of the 
business done on Cornhill to-day, are something like 
sixteen times as heavy as they need to be? One would 
naturally think that the owner not only should pay for 
the maintenance of the land value, by which he profits, 
but should also make the utmost of such public facilities. 
As a matter of fact, he does neither. Is it hardship to 
require him to bear the taxes? Is it possible to con- 
ceive of the adaptation of unlimited means to a 
smaller end than in this case of Cornhill? The object 
of all public service and good government is to provide 
people with home and business facilities. When, as 
in this case, neither of these objects is attained, is not 
the expenditure a public waste? Is it not money spent 
for nothing? Surely, there is no prosperity in vacant 
lots. These are, in one sense, worse than vacant, yet 
their value keeps on increasing. New buildings on 
the top of land increase its value, but a new subway 
with two new subway stations at public expense, 
under the land, will, as is here witnessed, sometimes 



82 THE A B C OF TAXATION 

double its value in spite of the old buildings upon it. 
Is it for such buildings as these that Boston builds its 
subways? 

One of the good things claimed for the single tax 
is that under it those genuine building syndicates 
which erect and improve buildings at their own 
expense for the benefit of the occupiers, may be 
expected to put a happy end to those alleged "land 
improvement companies " which exploit the land for 
the benefit of themselves, largely at the expense of the 
occupiers. 

When the palaces which insurance companies* build 
for their own investment are such shining examples of 
what the most carefully guarded capital can profitably 
do, how can these waste places in Cornhill be charged 
to capital? Capital would any day gladly undertake 
to pay annually for this whole square of land what it 
is worth for use, would pay for the present buildings 
their total worth, and would then equip the land 
luxuriously for business occupancy, asking in return 
only a secure title to its improvements. But when 
capital is asked to do this, as tenant, v/ith no title either 
to land or improvements thereon, it declines to play 
against loaded dice, and business has to live in tents 
and log cabins because its best friend, capital, is forced 
to play the role of a seeming enemy. The malefactor, 
i. e., the evil factor, in the case, is the private appro- 
priation of ground rent, which is like a check valve — 
the higher the steam pressure of public expansion and 

* It has been thoughtlessly alleged that the single tax would bring ruin to 
savings banks and insurance companies, by impairing the value of their 
land securities. Under any gradual adoption of the single tax this could 
hardly be a serious charge so long as investments are changed every three 
or five years, as is the custom of those fiduciary institutions. 



THIRD BOSTON OBJECT LESSON 83 

the demands of business, the more securely the title 
valve is pressed down to its seat. 

A title to land bought and paid for five or fifty 
years ago is not like other wealth. Title to land is 
simply a warrant to take indirectly at the annual 
round-up a certain proportion out of the wealth which 
other people's labour has produced upon that land. 
That is, it is a warrant to take the ground rent which 
public expenditure creates, leaving other people to go 
on paying the taxes with which to meet that public 
expenditure. 

Ground Rent a Reflected Value 

It may help to an understanding of the subject to 
remember that the site value of land is so to speak 
a reflected value, an intangible value, not value result- 
ing from individually directed labour. The immovable 
land reflects the movables that are upon it. In great 
centres of traffic in movables, the land value is great. 
Withdraw all movables from Boston, New York, or 
Chicago, divert them to other centres, and land value 
would vanish as does your image from the glass when 
you step away from it. How plain, then, is the 
unwisdom of taxing the things which a community 
wishes above all else to invite and to hold; how plain 
the wisdom of taxing nothing that can evade taxation 

The Natural Basis for a Natural Tax 

The ultimate natural basis for the assessment of a 
natural tax upon land is manifestly the basis upon 
which the assessor makes all his calculations of land 
value, viz., gross ground rent, what the land is worth 
for use. Ground rent is something that every man 



84 THE A B G OF TAXATION 

pays, and must pay, for the use of his land, and no 
constitution or statute, army or navy, can relieve him 
from this natural tax. He now pays this ground 
rent, and all other taxes besides. Our desire is to 
turn Ephraim from his petrified idols of taxation until 
he pays no tax except his ground rent, which he must 
pay in any event. 

The inequality in the division of wealth effected 
through special privilege is caused by* the failure to 
put a natural tax in the right place, and the subsequent 
aggravation of this unequal division is caused by the 
error of putting artificial taxes in the wrong place. 

The single tax is not a new device, with a set of newly 
devised principles peculiar to itself; it must stand, if 
it stands at all, upon demonstrable scientific principles 
of political economy. These we are seeking to deter- 
mine and apply, believing that the operation of such 
principles must bear the fruits by which they may 
be known and justified. 

Other sciences — mathematics, chemistry, physics, 
astronomy — have long been showering the world with 
blessings. Is it not time that economics, the science 
par excellence of the fair distribution of all these 
blessings, should assume its high privilege and preroga- 
tive as quartermaster, commissary, and purveyor, 
to govern the issue of all these Aladdin stores? 

In considering the possible ease with which the 
burden of taxation may be made finally to weigh, let 
the fact never be lost sight of that the selling value of 
land will, with the new purchaser, subsequently to the 
imposition of a new tax, slip out from under the burden 
like a globule of mercury from under the thumb. We 
find that the only place where the tax yoke will stay 



THIRD BOSTON OBJECT LESSON 85 

put is squarely upon the shoulders of ground rent, what 
the land is worth for use, its gross annual value. 
Take, for taxation, a portion of ground rent, and you 
have a basis for assessment that is stable, in that it is 
a value not affected by taxation. The selling value, 
or the assessed valuation, is not the shoulders, but 
the rump, or the small of the back, that will "slip the 
yoke," as the farmers say, as soon as real estate moves. 

By fact and reason we are, not led, but driven, to 
the conclusion that more than $650,000,000 of capital 
invested in Boston land to-day escapes entirely the 
burden of the tax which is assessed upon capital 
invested in buildings ; and the happy landlord of land 
and buildings bears no land tax burden, shifts his 
buildings tax upon his tenant, and thus himself entirely 
escapes the tax burden. This statement is a corollary, 
or consequent, of the accepted economic principle, that 
the selling value of land is reduced by the capitalised 
tax that is laid upon it. 

This view is in literal harmony with the substantial 
agreement of the economists, that the only direct tax 
(with the possible exception of taxes on incomes and 
inheritances) — the tax which cannot be shifted or 
evaded — is a tax, not upon the assessed valuation of 
land, nor upon the selling value of the land, but upon 
ground rent, or its capitalised value, the gross value 
of land. 

Chambers of commerce, merchants' associations, 
manufacturers, and dealers are constantly seeking to 
find or make the best and largest market for their 
commodities. The best market, it is fair to say, is the 
largest number of persons who are able to buy the 
wares they want. The greater the number of people 



86 THE ABCOF TAXATION 

who want every good thing that is made (and are 
able to have it) the better it is for trade. Thus, an 
equitable distribution of wealth is a vital requisite in 
the case. 

Make taxation equal, impartial, "reasonable" to 
the poor man, " proportionate" to the rich man, and 
the distribution of wealth will then be as equal as 
justice can make it, for it will be in proportion to the 
skill and industry of the hands and brains producing 
that wealth. " Equal opportunities for all, and special 
privileges to none." The equitable ideal is to-day 
unrealised because, while a comparatively equitable 
distribution of a portion of wealth is going on through 
the one universal channel of wages, congestion of 
wealth is constantly occurring through the second 
and only remaining channel, the channel of special 
privilege, which is invariably a privilege of the private 
appropriation of ground rent, always and wholly a 
social product. 

The single tax aim is, on the one hand, to widen the 
channel of wages by opening the way to equal opportu- 
nities, and by increasing the purchasing power of wages 
through reduction of prfces, and on the other hand, 
to narrow the channel of special privilege by making 
the man who has this privilege pay a tax proportioned 
to his privileges. 

Another Illustration 

The St. Paul's Church property on Tremont Street, 
Boston, standing between two large stores (Fig. XVI), 
furnishes another good illustration of what we have 
been saying and reiterating. 

Less than ten years ago $1,500,000 was offered for 



THIRD BOSTON OBJECT LESSON 87 

this property for business purposes, and the offer was 
declined. Since then the assessed valuations of the 
adjacent Tremont Street estates between Winter Street 
and Temple Place have increased more than 75 per 
cent. In view of these facts it should be very con- 
servative to estimate to-day: 

The value of St. Paul's Church property at . . $2,000,000 
For this value the St. Paul Society paid in 1820 . 100,000 



The people of Boston have since contributed by 
their aggregate and particular activities, 
industries, and expenditures .... $1,900,000 

An annual contribution for 87 years of much 

above ........ 20,000 



But, in recent years, this increase in value has 

been at the annual rate of not less than . . $75,000 

Church property being exempt from taxation, the 
people of Boston have to make up the amount 
of the exemption. This, in the case of St. 
Paul's is $22,500, and for all church property 
in the city is $385,000, a year. 

If then to the above average annual contribution 
of the public there be added these taxes for 1907, 
more than ....... 22,000 



The total annual contribution amounts to . . $97,000 

An amount equal to the 5 per cent ground rent of 
almost $2,000,000 worth of land, or to the taxes, at 
$15 .90 per thousand, on $6,100,000 worth of property! 
Ten out of the 354 cities and towns of Massachusetts 
— Everett, Hyde Park, Melrose, Milton, North Adams, 
Revere, Salem, Taunton, Waltham, and Watertown — 
and the whole county of Barnstable, have each an 
average land valuation of $6,000,000. Thus the cost 
of St. Paul's to the people of Boston has been far 
greater than would be the average income at the 



88 THE A B C OF TAXATION 

Boston rate of $16 per thousand, from taxation upon 
the land of any one of the above named ten cities 
or one county of the state for the year 1907. 

Under the single tax such conditions could not 
prevail. Prevailing, as they do, nothing but the 
private appropriation of a public ground rent can 
perpetuate them. Nothing but the taxation of ground 
rent can correct them. 

The St. Paul's illustration seems extreme on account 
of the total exemption of church property, but what 
has been said of it is from two-thirds to nine-tenths true 
of all vacant land, or of land slightly improved, as is the 
case with a large part of the business section of 
Boston. 

Granting all that St. Paul's may claim for religion 
and sentiment, we yet maintain — and its forty-one 
proprietors will doubtless admit — that an impartial 
distribution of the cost of religion and sentiment to 
the one hundred and twenty thousand families of 
Boston at this rate of more than $2,000 each, amounting 
to a total of more than $240,000,000 a year, would be 
an undreamed of union of Church and State. 

The object of this illustration is not to cast any 
invidious reflection upon St. Paul's Church, but rather 
to impress upon your minds the enormous dimensions 
of the reservoir from which the single tax proposes to 
draw all public revenue. 

The proprietors of St. Paul's are a body of Christian 
gentlemen of discernment and philanthropy; none are 
more likely than they to see the inconsistency of their 
situation; none more likely to welcome its cor- 
recting; none more likely to see that they will get a full 
share of betterment from a new and improved order of 



THIRD BOSTON OBJECT LESSON 89 

things ; that a religion and a church worthy of justifica- 
tion have no need of such alms as these from the people 
whom they seek to save. Brought face to face with a 
true apprehension of the problem, seeing the unequal 
operation of a tax exemption that gives the least to 
those most needing aid, and most to those who need 
it least, it would not surprise me if they were them- 
selves to instigate and inaugurate the remedy. 

Some Objections Answered 

It is objected to the single tax, that it is confiscation. 
But what is taken from the owner? No land is taken. 
The single tax is not land nationalisation. No right 
of occupancy or improvement or sale or devise is taken 
from the owner; nothing except the right to collect 
natural taxes from other people, and to be himself 
exempt. In the aggregate the new tax would be 
compensated for by the exemption of an equal value 
of buildings and personal property. The landlord 
who thinks himself discriminated against by such a 
tax has only to improve his land to escape the 
burden. 

Both land value and house value require to be 
maintained. The public creates and maintains the 
value of the land. The owner, directly as builder, 
or indirectly as purchaser, creates and maintains the 
use value of the house. 

The maintenance of the use value of the land by the 
public gives outright to the owner a fund the interest 
of which will pay his land tax. The maintenance of the 
use value of the house falls upon the owner, and he 
must recover his house tax out of the house rent 
increased so as to include the tax. This will be true, 



9 o THE A B C OF TAXATION 

because, unless the owner can get a rent sufficient to 
pay interest on the cost of the house, over and above 
taxes, no more houses will be built, until they become 
so scarce as to force rent to a point that will cover the 
cost of maintenance. 

How can taxation be confiscation? Etymologically 
the words have nothing, and colloquially almost 
nothing, in common. To confiscate is, according to the 
Century Dictionary, "to adjudge to be forfeited to the 
public treasury by way of penalty" — the meaning is 
inseparable from the idea of forfeiture. To tax, on 
the contrary, is "to levy money or other contributions, 
as from subjects or citizens, to meet the expense of 
government. " 

Is it just to allow the landowners' investment, now 
exempt, to remain exempt? Does either legal equity 
or ethics require that the land should be exempt from 
an increased tax, or that its owner should have even 
partial, much less total, immunity from the burden of 
taxation? Because a new tax upon land would reduce 
proportionately the selling price, should owners of 
land for that reason continue to go scot free? 

The advance in Boston's tax rate per thousand for 
1907 ($15.90) is $3 over that of 1897 ($13.00.) The 
capitalised value of this increase, $650,000,000 multi- 
plied by $3 per thousand, multiplied by twenty 
years (the number years purchase), is $39,000,000. 
Do we hear that Boston has confiscated $39,000,000 
worth of her citizen's land in the last ten years? 

Boston has to-day some $560,000,000 of new land 
value, which it did not have fifty years ago. Mean- 
time the tax rate doubled from $8 in 1856 to $16 in 
1906. The capitalised value of this $8 increase in 



THIRD BOSTON OBJECT LESSON 91 

rate amounts to say $90,000,000. Is it charged that 
Boston is to-day confiscating $90,000,000 of the land 
of her citizens? 

All taxes are expended in maintaining the value of 
land. How can any vested right, or statute law, or 
hoary custom make it confiscation for the community 
to tax a value of its own creation, especially since, 
through the capitalisation of an established land tax, 
it is now, or soon becomes, to the owner of the land, 
a burdenless tax? 

What Is Meant by the Single Tax 

At the eleventh Dinner-Discussion of the Economic 
Club of Boston, the club was addressed by Professor 
E. R. A. Seligman, of Columbia University, upon 
the topic: 

Resolved: That it would be sound public policy to 
make the future increase in ground rent a subject of 
special taxation. 

On that occasion there was printed and placed at 
each plate a statement of the meaning of the single 
tax, which, slightly revised, was as follows: 

1. It means the abolition of all taxation (not 
regulative or restrictive) except that upon land values. 

2. It means the gradual transfer to land of all those 
taxes now raised from buildings and other improve- 
ments, personal property, etc. 

3. It means that Boston would raise its whole tax 
in the same way that less than one-half of it is now 
raised, viz., by a tax upon the value of its land. 

4. It means to provide for common needs out of 
ground rent — a common product — instead of out of 
wages — an individual product. 



92 THE A B C OF TAXATION 

5. It means that out of its ground rent of fifty 
millions or more Boston would collect its whole tax of 
twenty millions instead of only ten millions as now. 

6. It means that Boston could raise the amount 
of its existing taxes by taking a trifle more than 
two-fifths of its ground rent (the annual value of land 
for use) in taxes instead of less than one-fifth as at 
present, thus making it possible to remit all other 
taxes if desired. 

7. It means the taxation of unearned incomes, 
instead of hard-earned incomes. 

8. It means a tax that is non-repressive, because, 
being wholly a tax upon special privilege, it can never 
be a burden upon industry or commerce, nor can 
it ever operate to reduce the wages of labour or 
increase prices to the consumer. 



PART III. 
OTHER ESSAYS AND ADDRESSES 

Chapter VIL 
Private Property in Land. 

Chapter VIII. 
Justice of the Single Tax. 

Chapter IX. 
The Single Tax and the Farmer. 

Chapter X. 
Regulation by Taxation. 

Chapter XI. 
Inheritance and Income Taxes. 

Chapter XII. 
The Single Tax. 



Chapter VII 
PRIVATE PROPERTY IN LAND 

"The primary error of the advocates of land nationalisation 
is in their confusion of equal rights with joint rights. . . In 
truth the right to the use of land is not a joint or common right, 
but an equal right; the joint or common right is to rent." 

— Henry George. 

MOSES and Isaiah and Herbert Spencer made their 
ages resound with the thunders of the moral 
law on the land question, and yet a groping world had 
to wait for Henry George to devise a modus operandi, 
and so 

Make channels for the streams of love 
Where they may broadly run. 

Asserting "the equal right of all men to the use of 
the earth," Herbert Spencer declared that "equity 
does not permit property in land." But, failing to 
see any alternative other than "nationalisation of 
the land," which was abhorrent to his philosophy, 
he later, while disavowing none of his former principles, 
proclaimed his intellectual despair and unconditional 
surrender in these words : 

I cannot see my way toward reconciliation of the ethical 
requirements with the politico-economical requirements. . . . 
The belief that land would be better managed by public officials 
than it is by private owners is a very wild belief.* 

* Letter to the London Times, November 6, 1889. See Henry George's 
"Perplexed Philosopher" (Doubleday, Page & Co., 1906), p. 77. 

95 



96 THE A B C OF TAXATION 

Coming upon Spencer's lost field, Henry George 
formed a new line of battle, changed the war cry of 
"equal right to land" to "joint or common right to 
rent," picked up the shepherd's sling of taxation, the 
familiar weapon which had escaped Herbert Spencer's 
attention, and gradually dispelling the mists of the 
old conflict, won the day. 

It is my opinion that few men have been more mis- 
apprehended, misinterpreted, and hence misjudged, 
than Henry George, and this, too, not infrequently, 
by zealous friends. This is especially true of the inter- 
pretation of his ultimate views regarding land tenure. 

Few people know of the distinction made by Henry 
George, by the science of economics, and by statute 
law between private property in land and private 
property in the things produced by labour, or between 
the private ownership of land and the private posses- 
sion of land. Therefore, if you say that private 
property in land is unjust, or that private ownership 
of land is unjust, the tendency is to close many minds 
to further consideration of a statement which to them 
savours too strongly of confiscation. One may attack 
with vigour the private appropriation of ground rent 
(what land is worth for use), and be easily understood, 
while an attack upon private ownership in land is very 
apt to be misunderstood. Able men sometimes assert 
that the aim of the single tax movement is the com- 
plete subversion and overthrow of the institution of 
private property in land. This confusion arises partly 
from a lack of clear understanding as to the meaning 
of terms, and partly from applying to land the theory 
of ownership which in law applies only to other things. 

Coming to an analysis of the different terms, posses- 



PRIVATE PROPERTY IN LAND 97 

sion, ownership, and property, used in describing the 
tenure of land, we find that while they are far from 
synonymous, they yet have much in common, and 
the terms are often used interchangeably. The 
"possession" of the dictionaries does not always 
imply ownership; but possession does imply the same 
physical dominion that belongs of right to ownership 
— which right the legal title to ownership grants and 
conveys. Henry George's proposal was to leave 
owners in possession of land, and to accord to that 
possession the legal right of physical dominion by 
means of a broad definition of the word, made to 
include the right "to buy and sell, bequeath and 
devise,"* or, in the usual form of the real estate deed, 
"to give, grant, bargain, sell, and convey"— a right 
universally granted to ownership and property. 

A title to land is a title to the rights and privileges 
that constitute its value, and that, largely at least, 
are created by the labour of the community. Title 
to the land itself, whether its value is one dollar or a 
million dollars, is necessary to security of improve- 
ments. Title to the annual value of land — ground 
rent — is not necessary to the security of improve- 
ments, which would be equally secure whether one- 
quarter or three-quarters of ground rent be taken in 
taxation. The dictionaries do not include land value 
in their definition of land. Land itself, deprived of 
the rights and privileges pertaining thereto — that is, 
land with a ninety-nine years' restriction of a tight 
and high board fence around it so that there would 
be no legal right of way to and from it — could have 
no market value. The value of land is in large part 

* " Progress and Poverty" (Doubleday, Page & Company), 1906, p. 403. 



98 THE A B C OF TAXATION 

created by those tributary surroundings which are 
provided through taxation, and hence such value is 
largely the product of the labour of the community as 
represented in its public, quasi-public, and private 
outlays. A man who owns land owns the soil, which 
of itself has little or ho value, and he owns every right 
and privilege, fee, title, etc., pertaining to the land 
from zenith to earth's centre, exclusive and absolute 
as against any other individual, but qualified and 
conditional as against the community. 

Private ownership of land may be defined as the 
proprietorship of the rights and privileges pertaining 
to the situation. It extends to the exclusion of all 
other persons (person being limited in law to "an 
individual, or a body corporate, other than the State"), 
but is subject always to the claims of the community 
to its share in the value of those rights and privileges, 
so far as that value is a social product, this claim to 
be asserted and maintained by means of the sovereign 
power of taxation. 

Property in land, ownership of land, in law, means 
tenure, holding, right of possession (subject to the 
sovereign right of taxation) and no more. The owner 
can have no more enjoyment of these rights than can 
the possessor as defined by Henry George. Either 
must have an exclusive enjoyment (proprietorship) 
in the benefits of which no one else can claim a share 
except through the agency of taxation. The rights of 
the public are the same under either definition. 

If, under the single tax, land owners should be 
allowed to retain a small percentage of rent, there is 
no moral difference whether such privilege attach to 
their ownership or to their possession. In either case 



PRIVATE PROPERTY IN LAND 99 

there is no recognition of the right of the private 
appropriation of ground rent, no compromise with 
any wrong attendant upon ownership that does not 
attend alike upon possession. 

It is not individual proprietorship of land, but the 
private appropriation of ground rent, which is charged 
with maintaining industrial slavery. True it is that 
under present conditions "when land value is made 
private property the law of equal freedom is denied"; 
but under the Single Tax this would not be true. 
Any degree of justice or injustice, with the single tax 
or without, would be exactly the same whether the 
tenure be called property, ownership, or possession. 
What practical difference, then, does it make, whether 
the tenure be called by one name or the other? The 
private property in land of which Herbert Spencer 
and Tolstoy* and Henry George treated was the 
untaxed ownership of our day and generation with 
its corresponding private appropriation of ground 
rent. It may be confidently asserted that when 
Henry George said, "Private property in land is 
unjust," he meant — as the whole principle and 
spirit of his teaching requires us to believe, and as the 
context of controverted passages shows — that private 
property in land values is wrong. f 

* See Appendix B. 

j - "The words 'private property in land' have two meanings. One meaning 
is, the legal power privately to appropriate rent. The other meaning is, the 
legal power exclusively to possess land in perpetuity. 

" The first power is the essence of landlordism. It was attacked by all the 
force Henry George possessed. The second power is land ownership, and this 
Henry George did not attack, but on the contrary said, if his plan were adopted, 
would 'continue just as now.' 

" The value of land has nothing to do with the validity of its title. If a man 
holds title to a parcel of land of no value, he is nevertheless a land owner." — 
John Z. White, in the Single Tax Review. 



ioo THE A B C OF TAXATION 

It is sometimes said that if land owners can right- 
fully claim ownership they are entitled to all the 
ground rent; that the common right to land and the 
common right to ground rent go together. How can 
this be true, when even under the land tenure of 
to-day, which is that of ownership, no one claims that 
land owners, as, for example, those of the City of Boston, 
are entitled to all the ground rent, but only to that 
part which is not taken in taxation. Their own claim 
falls short of "all" by the $10,000,000 now yielded up 
in taxation. In case the demands of taxation should 
be twice as great, would they be any more than now 
entitled to "all"? It is not easy to see how owner- 
ship can carry with it as a necessary consequence the 
private appropriation of ground rent, because, while 
there has never been a denial, there has always been 
a recognition, of the sovereign power and right to tax 
the land. 

Private ownership of land is no injustice to anybody 
to-day, nor has it been at any time. The untaxed 
private ownership of land value as it exists to-day is 
unjust. This does not mean that the ownership is 
unjust, but that not to tax it is unjust. An absolute 
ownership in land, such as Henry George recognises 
in the products of labour, would be unjust, but, says 
Mr. Edward Atkinson, no such "absolute ownership 
of land is recognised in the law books." Its tenure 
is always subject to taxation, and to the superior right 
of eminent domain. Feudal tenure would seem to 
have been a rude recognition of the principle that the 
beneficiaries of a government should pay the expenses 
of government. 

Henry George said, in 1879, in " Progress and 



PRIVATE PROPERTY IN LAND 101 

Poverty/' Book VIII., Chapter II., "I do not propose 
. . . to confiscate private property in land" but 
"to appropriate rent by taxation." "It is not nec- 
essary," he says, "to confiscate land; it is only 
necessary to confiscate rent." And again, "People 
are led into confusion by assuming that we propose to 
take land from its owners." Yet again, in 1892, in his 
chapter on Compensation in "A Perplexed Philoso- 
pher,"* Mr. George says: " The primary error of the 
advocates of land nationalisation is in their confusion 
of equal rights with joint rights. . . In truth the 
right to the use of land is not a joint or common right, 
hut an equal right; the joint or common right is to rent." 

The appalling distress and havoc consequent upon 
tenant eviction in Scotland, Ireland, and even in New 
York City, would be abolished if the evictors had to 
pay as much for land to be held idle as the evicted are 
willing to pay for it to use, and Mr. George's prediction 
that the users of the land would eventually become the 
owners would be realised. An unjust ownership would 
give place to a just ownership. The wrong is not in a 
just ownership, but in an unjust, because untaxed and 
hence monopoly, ownership. What Mr. George plainly 
aimed at was to destroy the latter while conserving the 
former. 

Mr. George perhaps never had an abler or fairer 
opponent, or one more analytical in his treatment of 
the issue, than Mr. Edward Atkinson. Mr. Atkinson, 
early in his argument at Saratoga in 1890, in order 
to limit their discussion to their differences, proceeded 
to eliminate their agreements, chief of which, to his 
mind, was that land should remain private property. 

♦Doubleday, Page & Co., New York, 1906, p. 242. 



102 THE A B C OF TAXATION 

Mr. George, although he immediately followed 
Mr. Atkinson, made no attempt then or later to con- 
tradict Mr. Atkinson's representation, nor did the other 
principal speakers in opposition, Professors Andrews, 
Clark, and Seligman, charge Mr. George with advocat- 
ing the abolition of private property in land. 

Mr. Atkinson said: 

Mr. George and myself concur in one point: namely, that 
there is no absolute property in land in any States which are 
founded on the English common law. In fact, there is, I 
believe, no absolute property in land anywhere. Conditional 
property in land — i. e., peaceful individual possession of specific 
parcels of land — is admitted to be necessary to its use by Mr. 
George and myself. . . . Mr. George holds throughout 
his argument to the absolute necessity of giving conditional 
ownership, or complete, full, and peaceable possession of land 
to those who may chose to take it under the new condition; and 
he has justified this ownership in many ways, not only in fact, 
but in words. He says, "In applying to public use the power 
of drawing on the general wealth which pertains to the owner- 
ship of land, we discourage ownership without use." In that 
phrase he admits the ownership which he later justifies in the 
following words: "It (i. e., ownership) arises from the necessity 
which comes from the highest use of land of giving individual 
possession, and comes from the difference in the capacity of 
land." And, finally, after advocating the single tax, on land 
valuation, he justifies it only in these significant words: "Under 
such conditions, men would not care to hold land which they 
did not want to use; and users of land, where their use was more 
than transient, would become the legal owners, having the assured 
privilege of peaceable possession and transfer as long as the 
tax was paid." . . . What is the right of transfer except 
the right of purchase and sale ? What is peaceable possession 
and legal ownership, except a grant of property in land by the 
State ? . . . Mr. George sustains the necessity of private 



PRIVATE PROPERTY IN LAND 103 

ownership of land, in the most positive terms; and he is right. 
. . . To haggle about the difference between possession 
and ownership of land is mere word-catching. But Mr. George 
uses the term "ownership" (i. e., private ownership) in the 
most positive way. Neither he nor myself sets up absolute 
ownership. Therefore, it follows of necessity that the only 
ground of difference between the advocates of the single tax 
system, who concur with Mr. George in admitting the absolute 
necessity of private ownership of land, under suitable conditions, 
to which all shall be subject alike, is as to the conditions under 
which that private ownership and possession shall be granted, 
and under which peaceable possession through all time and 
through all transfers shall be sustained by the whole power 
of the State. . . . In the present discussion, it has appeared 
that Mr. George and myself agree: — 

1. That there is no absolute ownership of land under the 
English common law. We agree that what individuals now 
possess is "an estate in land" which is subject to many con- 
ditions. These conditions may be varied. . . . 

2. We agree that the individual possession of land is necessary 
to productive use, in order that humanity may be sustained; 
in other words, that the land must be impropriated. 

And so, with Henry George, we insist that the real 
controversy in hand is not over the question whether 
private property in land is right or wrong, but whether 
in law and in morals private ownership of land should 
or should not include the private appropriation of 
ground rent, the annual value of the land and — if it 
should — what ought to be the limit of such 
appropriation. 

The contention of the single tax advocate is that 
this limit is to be found in the dictates of justice rather 
than in the letter of any ephemeral statute. On this 
point, above the utterances of agitators and economists, 



104 THE A B C OF TAXATION 

let there be heard the voice of the Christian Church, 
as found in the doctrine of St. Thomas Aquinas when 
he says : 

Human law is law only in virtue of its accordance with right 
reason, and it is thus manifest that it flows from the eternal 
law. And in so far as it deviates from right reason it is called 
an unjust law. In such case it is not law at all, but rather a 
species of violence. 

This is reiterated in the teachings of the Catholic 
Church, notably in the Encyclical of Pope Leo XIII. 
on the Condition of Labour, and is referred to in the 
following quotation from a prominent Catholic priest: 

As to all property, land included, the Pope lays down the 
law of the Church in this comprehensive sentence: "The right 
to possess property is from nature, not from man; and the State 
has only the right to regulate its use in the interests of the public 
good, but by no means to abolish the right to possess it altogether. 
The State is, therefore, unjust and cruel, if in the name of 
taxation, it deprives the private owner of more than is just." 

It follows from this declaration that if the single tax theory 
as presented by its advocates aims at no more than to "regulate" 
the right of property in land "in the interests of the public 
good," and not "to abolish it altogether," or to take away 
from the private owner of land, "in the name of taxation," more 
than is just, surely such a proposal is not condemnable on 
ethical grounds. 

Now, if I understand the aims and claims of the Single Tax 
League, it clearly recognises the right of private or individual 
ownership of land. It proposes only to levy such a tax upon 
land as will support the government; thus throwing the burden 
of taxation on that part of the value of the land which is not the 
result of the owner's foresight, intelligence, or labour, but is the 
result of the collective labour, growth, and development of the 
whole community. 



PRIVATE PROPERTY IN LAND 105 

In considering, therefore, a tax on land values, we must 
bear in mind that it is a fundamental teaching of the Church that 
the common good of all mankind is an end that must be kept in 
view; that the community is the overlord of the landlord; that 
every individual holds whatever land he possesses subject to 
the high and supreme title of eminent domain. 

"If I thus correctly interpret your aim and object, I do not 
hesitate to say that your system of taxation is not condemned 
by the Catholic Church, nor is it contrary to her ethical 
teachings."* 

To the foregoing there should be added the following 
words of the Rev. Edward McGlynn in his statement 
to the authorities of the Church of Romef regarding 
what he broadly conceived to be the right of eminent 
domain with deductions therefrom : 

The organised community through civil government must 
always maintain the dominion over those natural bounties, as 
distinct from products of private industry, and from that 
private possession of the land which is necessary for their 
enjoyment. 

The increasing need for public revenues with social advance 
being a natural God-ordained need, there must be a right way 
of raising them — some way that we can truly say is the way 
intended by God. ... By a beautiful providence, that 
may be truly called divine, since it is founded upon the nature 
of things and the nature of man of which God is the creator, 
a fund, constantly increasing with the capacities and needs of 
society, is produced by the very growth of society itself, namely, 
the rental value of the natural bounties of which society retains 
dominion. The justice and the duty of appropriating this fund 

* Extract from an address by the Rev. Robert J. Johnson, Rector of the 
Gate of Heaven Church, South Boston, at a reception and dinner given by the 
Massachusetts Single Tax League to the Catholic Clergy of the Archdiocese 
of Boston, December 3, 1900. 

•j-For Dr. McGlynn's complete statement as presented in Italian to Mgr. 
Satolli, Dec. 1892, together with English translation, see Appendix D. 



io6 THE A B C OF TAXATION 

to public uses is apparent in that it takes nothing from the 
private property of individuals except what they will pay 
willingly as an equivalent for a value produced by the com- 
munity, which they are permitted to enjoy. The fund thus 
created is clearly by the law of justice a public fund, not merely 
because the value is a growth that comes to the natural bounties 
which God gave to the community in the beginning, but also, 
and much more, because it is a value produced by the com- 
munity itself, so that this rental value belongs to the community 
by that best of titles, namely, producing, making, or creating. 

To permit any portion of this public property to go into 
private pockets, without a perfect equivalent being paid into 
the public treasury, would be an injustice to the community. 
Therefore the whole rental fund should be appropriated to 
common or public uses. 

In the desired condition of things land would be left in the 
private possession of individuals, with full liberty on their part 
to give, sell, or bequeath it, while the state would levy on it for 
public uses a tax that should equal the annual value of the 
land itself, irrespective of the use made of it or the improve- 
ments on it. 

The only utility of private ownership and dominion of land, 
as distinguished from possession, is the evil utility of giving 
to the owners the power to reap where they have not sown, to 
take the products of the labour of others without giving them an 
equivalent. 

Thus it should be clear that what people need to see 
in order to incline them to the single tax is not so 
much "the wrong of private ownership" — a phrase 
which often both violates and confuses their moral 
sense — but "the wrong of the private appropriation 
of ground rent" — a phrase which does neither. 

It does not necessarily follow from this characterisa- 
tion of a doctrine as morally sound, that what is right 



PRIVATE PROPERTY IN LAND 107 

in principle may not be wrong in method. As to 
method, Dr. McGlynn was in accord with Henry 
George in his mature conclusion, given -in his own 
words* that "we can only accomplish the change we seek 
by the slow process of educating men to demand it. In 
the very nature of things it can only come slowly, and step 
by step. We do not delude ourselves on that point, 
and never have." And again :f "But in thinking of 
details it should be remembered that we cannot get to the 
single tax at one leap, but only by gradual steps, which 
will bring experience to the settlement of details.' 7 

Neither of them concerned himself with specific ways 
and means. Neither thought of interpreting the state- 
ment that all ground rent ought to be taken for public 
use to mean that the whole of it ought to be taken, and 
at once. But both, recognising that a right thing may 
be done in a wrong way, insisted that a right way ought 
to be found to do a thing that ought to be done. This 
book, The A B C of Taxation, is a search for that 
right way. 

♦ "Saratoga Discussion," 1880, p. 78. 
■j- Century Magazine, July, 1890, p. 401. 



Chapter VIII 
JUSTICE OF THE SINGLE TAX 

TO GO to the foundation of the whole matter of 
taxation, we contend that the social disorder 
and derangement complained of to-day is mainly due 
to an unnatural and unequal distribution of wealth. 
The solution of the problem of taxation will solve the 
problem of the distribution of wealth. Wealth is 
produced in proportion to the skill and the industry 
of the hands and brains of all the world's workers. 
The annual division of this wealth among these workers, 
before taking taxes into account, is in proportion to 
ability and in proportion to special privilege, chiefly 
the private appropriation of ground rent. After this 
grossly unequal annual division has been made, comes 
an unequal and unjust taxation to aggravate still 
further these inequalities. By the process of taxation, 
Mr. Shearman estimates, the taxable savings of the 
very rich shrink 4 per cent while those of the very poor 
shrink 78 per cent. Under the single tax the savings 
of both rich and poor would shrink in the same pro- 
portion, that is, about 50 per cent. Such inequalities 
tend to increase rather than decrease with time. 

We say that the division under the present system 
(unequal by more than a hundredfold) of the annual 
taxable savings (before taxation) is regulated in two 
ways, and in only two ways — by ability and by 

108 



JUSTICE OF THE SINGLE TAX 109 

special privilege. We agree that a large part of this 
inequality is due to difference of ability, but that much 
larger part which is due to special privilege (chiefly the 
private appropriation of ground rent) we would by our 
proposed system of taxation abolish. 

To a discrimination of a hundredfold in the division 
of savings there is now added another twenty-fold 
discrimination in taxation. In pursuit of an equitable 
system of taxation we want to right this glaring wrong 
at once. First, distribute wealth according to ability, 
that is, according to production ; second, destroy special 
privilege by a direct tax, which is paid by the man 
upon whom it is assessed (rich and poor alike), instead 
of an indirect tax, which is never paid by him upon 
whom it is assessed. 

Land 

By land, we mean, strictly speaking, all natural 
bounties, forces, and opportunities — the source of all 
wealth. Blackstone says it means "everything 
terrestrial/' 

Franchises 

The single tax theory regards all the special privilege 
value in railroad shares, telegraph and telephone, gas 
and electric stocks as "land" and nothing else, subject 
to taxation with all other land values, and at the same 
rate, because franchise values are created and main- 
tained by precisely the same public expenditure and 
service that gives value to land. In this way the 
special privileges of corporations would be taxed. 
Their tracks, rolling stock, buildings, and improvements 
would not be taxed. 



no THE A B C OF TAXATION 

A franchise value is a land value. Land value is 
total value of real estate less value of improvements. 
Franchise value is total trust or monopoly value less 
value of improvements. Land value and franchise 
value should be taxed at the same rate. 

Single taxers believe that taxation is the one and only 
effective weapon, and that right in hand, with which to 
destroy the evil of trusts and monopolies, without 
harm to the good that is in them. 

Wealth 

Man, by the application of his labour to land, the 
source of all wealth, directly and indirectly produces 
the things he wants for the satisfaction of his desires. 
All these things taken together we call wealth. To class 
land as wealth savours, we say, of economic confusion. 

What features, we ask, has land in common with 
wealth? On the other hand we ask you to note the 
differences between land and wealth. 

Land includes nothing made by man. Wealth 
includes nothing not made by man. Land is a source. 
Wealth is a product. Land is raw material. Wealth 
is a manufactured article. Land has to be created not 
oftener than once in "six thousand years." Wealth 
has to be recreated every four or five years. Land is 
indestructible. Wealth is perishable. Land never 
wears out, but is worth more the more it is used. 
Wealth is always going in quick consumption. Land 
is a fixed quantity. Wealth can be increased at will. 
The site value of land is determined by demand only. 
The value of wealth is fixed by supply and demand. 
Land never requires insurance or repairs. Wealth 
always needs them. Land can always be found. 



JUSTICE OF THE SINGLE TAX in 

Wealth is mercurial and fugitive. While wealth is a 
private product, so to speak land value is a public 
product, publicly created and publicly maintained. 
What more than these differences is needful to make 
reasonable and convincing a separate classification of 
land and wealth, especially for purposes of taxation? 

The right of property in wealth is the right of a man 
to eat his bread in the sweat of his own brow. The 
right of property in land to-day is the right of a man 
to eat his bread in the sweat of another man's brow. 

Usufruct means property in what the land produces 
this year by the application of one's own labour. 

Private ownership, including as it does to-day the 
private appropriation of ground rent, means property 
in what the land may produce for the next ten, one 
hundred, or one thousand years by the application of 
the labour of others. 

The Capitalised Tax 

By the capitalised tax is meant a sum, the interest 
of which would pay the tax. It is usually found by 
multiplying the tax by twenty because 5 per cent inter- 
est is one-twentieth of the principal. For every $16 of 
tax, the selling value of land is less than it would be if 
free of this tax, by $320. an amount which at 5 per cent 
would pay the tax, $ 16, and leave for the selling 
value a purchasing price which would net 5 per cent 
return to the investor. 

Value and Valuation 

There can be, strictly speaking, only one value for 
anything, and that is, what it will sell for. But there 
may be many valuations of the same thing, and a thing 



ii2 THE A B C OF TAXATION 

subject to charges is not, scientifically speaking, the 
same as a thing free from charges. Title to a tract of 
land subject to taxation, is not by any means the 
same thing as title to the same land free of taxation. 
Therefore, in dealing with land, we speak of a gross 
value, and an assessed valuation. 

Gross value is the capitalisation of the gross ground 
rent. If the current rate of interest is 5 per cent, the 
capitalisation is said to be "at twenty years' purchase," 
that is, twenty times the amount of the annual income. 
In other words, it is an amount 5 per cent of which 
would be equal to the annual rent which the land 
commands for use, free of charges. What pays $1 .000 
annual net income, is worth $20,000 to buy. This gross 
capitalised value is the value, which, as we claim, 
should even under the present system be taxed uni- 
formly with other private property. 

If the gross ground rent of a tract of land is $1,000 
a year, and it is subject to no taxes, the market value, 
assuming the usual rate of interest to be 5 per cent, will 
be $20,000. But if it is subject to an annual tax of 
$200, the tax reduces the net rent by 20 per cent and 
hence reduces the price of the land correspondingly to 
$16,000. 

Net value is the capitalisation of the net rent (the 
income less the tax) at the current rate of interest, and 
is more familiarly known as the selling value. 

The assessed valuation is the valuation placed upon 
land by assessors for purposes of taxation. It varies 
in different localities, being in Massachusetts usually 
from 13 to 100 per cent of the selling value. 

We often speak of this tax upon land value as a tax 
according to benefits bestowed, but, strictly speaking, 



JUSTICE OF THE SINGLE TAX 113 

it is a tax neither according to benefits nor according 
to ability, because it is a tax only in form, not a tax in 
substance. The public merely takes out of the land 
with its left hand the value which, with its right hand, 
it has put into the land. 

Our platform has but one plank, " Equal opportuni- 
ties for all and special privileges to none" — or, yet 
more briefly, "Special privileges to none," because 
payment for special privileges will take the place of 
taxes, and there can be but one result, viz., equal 
opportunities for all. 

We ask your thoughtful criticism of the single tax 
tenet regarding wages. We believe in high wages and 
low prices, which are the equal opportunity channels 
for the equitable distribution of wealth, instead of low 
wages and high prices, which are the special privilege 
channels for the inequitable congestion of wealth. 
Contrary to popular illusion, wages are not regulated 
by dollar wheat, but the price of wheat is fixed by the 
competition of dealers, and wages are fixed by the 
competition of labour. The benefits of high prices go 
to the few, while the benefits of low prices go to the 
many. 

If a man has the best corner lot in a city, he has a 
monopoly, because by the private appropriation of 
ground rent (a special privilege conceded to him by the 
State, and having all the sanction of law and custom), 
he cannot help diverting, without fault of his own, into 
his own private pocket, the public expenditure in its 
transmuted form of ground rent. So we say that the 
special privilege greater than all others put together 
is the private appropriation of ground rent. We 
are entirely agreed to the private ownership of land, 



ii 4 THE A B C OF TAXATION 

with the right to possess, "to buy and sell, bequeath 
and devise it," provided only that equal rights shall 
be asserted and secured by taking in the form of 
taxation enough of the ground rent to meet all public 
expenses. Because taxes are spent upon the land, we 
would take them from the land. 

The tendency to-day of this regulation by taxation, 
of trusts, monopolies, franchises and special privileges 
in all its forms would, we claim, be strongly toward 
a rectification of the admittedly unjust distribution, 
not of present wealth, but of wealth hereafter to be 
produced. 

When all special privileges, including the special 
privilege of private appropriation of ground rent, are 
abolished by exacting payment for the same at their 
market value, then taxation, which now so grievously 
aggravates an unjust distribution, will be unnecessary, 
and you will have one channel only, and that the one 
proper channel, for the distribution of wealth, viz., 
wages proportioned to skill and industry. 

In all primitive societies the soil has been held as 
common property with equal rights of the many to 
natural opportunities. To-day the land tenure pendu- 
lum has swung clear to the other side, and in highly 
civilised society land has come to be held by the few 
in private ownership with its special privilege of the 
private appropriation of ground rent. The single 
tax aim is to bring the pendulum back into a position of 
reconciled equilibrium, modern individual ownership 
by the few brought into harmony with primitive com- 
mon ownership by the many. One reason why so 
many men are averse to conceding to the individual 
the right of ownership in land is that the right has 



JUSTICE OF THE SINGLE TAX 115 

been so often abused. The single tax offers itself as a 
means of correcting this abuse. 

The Self-operating Social Law 

We ask you to look with us until you see, as we think 
we see, in ground rent the self-operating law for the 
social system, something that will, if unobstructed, 
tend to hold in just equilibrium the conflicting factors 
of land, labour, and capital, 

The particular factor in our reform which we would 
press upon your attention, because generally least 
understood, is the nature of ground rent. While land 
and wealth (or other wealth) have no feature in com- 
mon, taxes and ground rent appear to us to have close 
resemblance in every feature. Taxes are the cause, 
ground rent is the effect. Taxes are the fertilizer, 
ground rent is the crop. Where there are no taxes, 
there is no ground rent. Where taxes are scanty, 
ground rent is scanty. Where taxes are abundant, 
ground rent is abundant. The ground rent of a com- 
munity is, roughly speaking, one-half of it the result of 
public expenditure and one-half the result of quasi- 
public and private expenditure; but all taxes (public 
expenditure) are transmuted into ground rent, a 
change of name without a change of nature. 

The single tax, we claim, is absolutely just and 
equitable, because it gives to every man equal (not 
joint) access to the land; because it exacts tribute from 
every man in proportion to his use of the land ; because 
it leaves untouched the wealth which labour creates ; 
taxes for the public use only a value of its own creation 
upon land of God's creation, giving full value received 
in the privilege of exclusive possession and hence is 



n6 THE A B C OF TAXATION 

not a tax at all, but a divinely natural provision, 
restoring to every man his inalienable share in the 
value of the land. 

Just in Its Apportionment 

Full single tax would mean all national taxes 
apportioned to cities and towns in proportion to their 
respective land values; all local taxes, including 
national, assessed upon land values alone. In 
"Natural Taxation," page 147, Mr. Shearman makes a 
plausible claim that for the year 1890 "all national 
and local taxes, if collected exclusively from the ground 
rents of the United States would have absorbed only 
44^ per cent of those ground rents, leaving 55^- per 
cent to the owners of the bare land as a clear annual 
income, besides the absolutely untaxed income from 
all buildings and improvements upon their land." 

Repeated calculation of the ground rent of the state 
of Massachusetts and of the City of Boston, as well as of 
many other cities and towns, has fully justified Mr. 
Shearman's position that gross ground rent is approxi- 
mately double the amount of taxes in each case. 

The constitutions of the several states and the moral 
sense of all the people maintain that government should 
not take private property for public use without full 
compensation. Single taxers maintain not only that 
there is no right, but that there is no need to do this, 
even under forms of taxation. 

We would exempt personal property because by 
the same system under which you collect a tax upon 
the poor man's "visibles," you are putting upon the 
rich man's "invisibles" a tax which you cannot collect. 
Equalisation is possible only by abolishing the tax 



JUSTICE OF THE SINGLE TAX 117 

on both "visibles and invisibles. " We would exempt 
buildings, because, by the same system under which 
you collect from the poor man a tax upon his house in 
which he lives, you are assessing the rich man for his 
store, his office building, and his apartment house, a 
tax which he himself can never be made to bear. 
Equalisation is possible only by abolishing the tax on 
all buildings. 

Single taxers want to shift the taxes from the house 
to the land, because every time this is done it is made 
easier for the individual to get the house; whereas 
when the tax is shifted from the land to the house, it 
becomes harder to get both house and land. 

We say, tax the land and exempt all other wealth, 
because, when you tax both the opportunity to produce 
(land), and the thing produced (wealth), you are in the 
broadest sense inflicting double taxation. 

You do not tax the old building, because, commer- 
cially speaking, it has "gone to decay." Why, then, 
should you tax the new building, which, from the 
moment it is finished, is fast "going to decay"? We 
say, tax only the land value, which never decays. 

The millionaire should pay for the same sort of land 
the same tax per acre as the poor man, and no more. 
When he occupies a similar seat in the theatre, 
to see the same show, he simply pays the same price for 
his ticket, full value for what he gets. When taxes 
are levied in proportion to "benefits bestowed," no 
need remains for taxation according to ability to pay. 

Justice of the School Tax 

We sometimes hear the question: Is it proportionate 
and reasonable that the poor man's vacant lot should 



n8 THE A B C OF TAXATION 

be taxed to send the rich man's children to the public 
school? But what difference does it make whether the 
rich man sends a dozen children or none to the public 
schools? Public schools add their cost to the land value 
of the city or town. They add just as much value to 
the land of the man that sends no children as to that of 
him who sends a dozen. Is not this fact sufficient to 
reconcile the childless man to the justice of his school 
tax? The cultivation of a family would not increase 
his tax any more than the cultivation and improve- 
ment of his farm would add to the farmer's tax, and 
thus by the single tax both farmers and families would 
be encouraged. 

Socialism 

The single taxer appeals also to the socialist to see 
and realise the self-evident truth that, without the 
socialisation of ground rent, were every other possible 
dream of socialism, political socialism or Christian 
socialism, brought to a perfect realisation, its full 
benefit to the last farthing would be reflected in the 
enhanced value of the land and so go straight and 
unearned into the pockets of the land owner. 

There is in natural taxation nothing of technical 
socialism,* which means the artificial assumption by 
society of a function that is primarily individual. 
It is rather a resocialisation of that which by its 
own nature, in its inception and its growth, can be 
nothing but socialised, but which has been artificially 
desocialised. 

Socialism would replace artificial discord with 
artificial concord. Single tax is natural harmony in 

* See Appendix A. 



JUSTICE OF THE SINGLE TAX 119 

the absence of artificial discord. We speak paradoxi- 
cally of the socialisation of ground rent as though it 
were something to be artificially done. How can we 
socialise that which by its very nature socialises itself, 
and can never be naturally anything but socialised? 

A Puzzling Question and a Simple Answer 

What are the obstacles that to-day so impede a 
thorough consideration of the basic economic principle 
of the single tax by pulpit, press, and legislator? 

The answer to this apparently puzzling question is 
after all a simple one: 

First is the notion that the single tax contemplates 
public ownership of land, which is not true; second, 
the impression that it would disturb present land 
titles, which is not true; third, the charge that it would 
take for the community what belongs to the individual, 
which is not true; fourth, the poisoning misappre- 
hension that, right or wrong, it would amount to-day 
to taxing into the public treasury practically the whole 
rental value of one species of property. 

All men are agreed as to the ethics of the single tax, 
that the earth was made for all men and not for a few. 
This is what Mr. George calls an instinct, an intuition 
of the human mind, a primary perception of the human 
reason. If we were to-day starting anew, the single 
tax would be manifestly wise as a method of taxation ; 
if it could to-day be put in operation without injustice 
to any one, it would still be a manifestly wise plan of 
taxation. Can it be done? 

The single taxer is firmly of the opinion that it is 
no part of God's economy that justice to one man can 
work injustice to another; that for every alleged 



i2o THE A B C OF TAXATION 

injustice to one man there would be a far greater justice 
wrought to hundreds and to thousands; that the 
vacant lot which is his only all, is not the poor man's 
universe; that his individual loss or benefit will be 
measured, not by his relation to that vacant, unpro- 
ductive lot, but by his relation to the social fabric into 
which he is woven and to the universe of which he is a 
part; and that for every alleged confiscation there would 
be a score of compensations. 

If the moral theory of the "compensationists" 
were sound, it would apply — and many of its advo- 
cates claim that it does apply — as well to slavery as to 
landlordism, so that slaves could not be justly set free 
unless the masters were compensated. The most 
outrageous act, then, of what the " compensationists " 
call confiscation, was committed by God himself, when 
he led the Israelites out of Egypt. Instead of com- 
pensating the Egyptians, who thereby lost valuable 
"private property" which had had the sanction of four 
hundred years' acquiescence, He engulfed in the Red 
Sea those whose sensitiveness to the injustice of 
"confiscation" stirred them to follow and reclaim 
their confiscated property. 

If the cinder is not removed from your eye at once, 
and inflammation follows, what then do you do? Do 
you bathe the head, apply a plaster to the back, hot 
water bottles to the feet, and some specific to the 
stomach? Or do you forthwith remove the speck from 
the eye whatever the pain it costs you? The smaller 
the offending cinder, the more intense oftentimes the 
inflammation, and the more difficult of removal. The 
longer the operation is delayed the more painful the 
conditions. While guarding well "the apple of the 



JUSTICE OF THE SINGLE TAX 121 

eye," what irritation from mote or beam or cinder can 
compare with the social irritation caused by injustice? 

Single Tax and the Massachusetts Constitution 

Query: Is not the present system of taxation clearly 
in violation of those state constitutions which, like that 
of Massachusetts, provide that assessments shall be 
"proportionate and reasonable" since, under that 
system a whole class of property holders is practically 
exempt from taxation? 

Query: Is not a system of taxation which so favours 
one class of citizens above another in direct violation 
of the constitution of Massachusetts, which provides, 
Part I., Article VI., that "no man, or corporation, or 
association of men, have any other title to obtain 
advantages, or particular and exclusive privileges, 
distinct from those of the community, than what arises 
from the consideration of services rendered to the 
public? 

Query: Is not the taxation of ground rents in lieu 
of all other taxation manifestly in harmony with the 
constitution of Massachusetts, which reads as follows, 
Part I., Art. VII.: "Government is instituted for the 
common good; for the protection, safety, prosperity, 
and happiness of the people; and not for the profit, 
honour, or private interest of any one man, family, or 
class of men. Therefore the people alone have an 
incontestable, unalienable, and indefeasible right to 
institute government; and to reform, alter, or totally 
change the same, when their protection, safety, 
prosperity, and happiness require it." 



CHAPTER IX 
THE SINGLE TAX AND THE FARMER 

DO NOT let it be thought that the single tax would 
be less at home in the country than in the city. 
The farmer was the first wage-earner, himself his own 
employer, his wages the full produce of his labour. He 
is the primary wage-earner — the one nearest the 
ground. His wages (one-third those of the whole 
country) are sufficient to determine all other 
wages, and should be the highest imputable to 
his ability, unabridged by special privilege or by 
taxation. 

One mission of the single tax is to raise and maintain 
the farmer's wage at the primitive point of the full 
produce of his labour, and to protect and defend the 
farmer as his own employer, not merely as a tenant 
farmer. 

What taxes ought the farmer to pay? He should, 
of course, pay his fair share of the common expenses 
in proportion as he is benefited by the services 
of his community. It would not be fair for him 
to pay any part of the share of another man 
who has greater benefit than he from this service. 
What could be fairer than to tax the farmer and 
the village man respectively, in proportion to the 
benefits bestowed upon each of them by the 
social services which his property puts at his 



THE SINGLE TAX AND THE FARMER 123 

command? What better indication can there be 
of his proportionate share of these public advan- 
tages than the site value which they contribute 
to his land? 

The farmer is, so to speak, to a great extent his own 
commonwealth, his own municipality, and very sen- 
sibly municipalises most of his own public utilities 
instead of farming them out. The usual items of 
common town expenditure are for water, light, fire 
department, police, sewerage, pavements, sidewalks, 
roads, schools, and the poor. As to water, light, fire 
department, police, and sewerage, the farmer furnishes 
himself at his own expense, and this is a sufficient 
practical reason for exempting him from the burden 
of contributing for village services of the same sort 
provided at common expense. This leaves in general 
three things for which the farmer ought to be taxed, 
viz., the roads, the schools, and the poor. These 
three things represent needs which the farmer has in 
common with the community in which he lives, and 
it is submitted that in justice to him, and greatly to 
his advantage, they should be provided for by a com- 
mon tax, levied in proportion to land values, either by 
the State or by a minor political division, as efficiency 
and economy may dictate. 

A tax laid upon land values is by far the most "pro- 
portionate and reasonable" because every man, woman, 
and child contributes to this value. The farmer to- 
day, whose land values are so small — almost 
insignificant — but whose labour values — his build- 
ings and improvements, such as drains, fences, trees, 
crops, reclamation and fertilisation of land, and his 
personal property, which is of course a labour value — 



i2 4 THE A B C OF TAXATION 

are seen and known of all men, he it is who is bearing 
in great degree the evaded burden of the owner of 
stocks and bonds. Such discrimination finds illustra- 
tion on every hand. For instance, with the value of 
the buildings and improvements of the Berkshire, 
Mass., farmer far in excess of the site value of 
his land, while in Boston, Winter Street buildings have 
only one-thirteenth the value of Winter Street land, it 
is easily seen, as a matter of simple proportion, how the 
taxation of buildings bears more than thirteen times as 
heavily on the Berkshire landholder as it does on the 
Winter Street landholder. 

In calculating the relief to the farmer through the 
exemption of improvements, three classes of farmers 
are to be considered: (i) The small farmers; (2) the 
large farmers ; (3) the bonanza farmers. The buildings 
and improvements of the small farmer will invariably 
have a much greater value in proportion to his land 
than those of the large farmer, and greater still when 
compared with the bonanza farmer, so that the same 
amount of tax distributed in proportion to land alone, 
as compared with a tax laid upon land and improve- 
ments, would relieve the small farmer just in proportion 
as his improvements were a larger fractional part of 
his total holding. Herein surely lies the only cure 
for "speculative" farming — i. e., farming more land 
than can be tilled — and for tenant farming — i e., 
farming the farmer. 

The farmer to-day is doubly discriminated against, 
first in the over-valuation of agricultural land, and 
secondly, in the under - valuation of urban or 
village land. Between these upper and nether 
millstones he is being ignorantly ground. These 



THE SINGLE TAX AND THE FARMER 125 

inequalities of assessment deserve separate and 
particular treatment. 

I The Overvaluation of Agricultural Land 

Mr. Thomas G. Shearman in his " Natural 
Taxation"* has made a careful estimate, with which 
the farmers themselves would no doubt agree, that 
improvements in the land itself constitute 60 per cent 
of the assessed valuation of farm land. His language is : 

Upon the whole, it is safe to say that, under a system of 
valuation excluding all improvements, cultivated farms would 
be assessed at less than 40 per cent of their whole value, 
improvements included. 

2. The Undervaluation of Urban or Village Land 

As already stated the dimensions, as well as the 
continuous character, of the contribution made by the 
people to the growth and volume of ground rent, are 
seldom realised — by many persons hardly suspected, 
even in cities, where they are more acutely discernible. 
But especially is this the case in village communities 
and factory towns, where it has not been the habit to 
note closely the value of land apart from buildings, 
and the rise and operation of ground rent. 

A few illustrations will show how this potential 
agency, ground rent, escapes observation both in small 
and large towns, and in small cities as well. 

In the following illustrative examples, the ratio 
between assessed valuation and actual net value of 
land, as indicated by actual rentals, is calculated by 
deducting from the net income of the entire estate 
(i. e., total income less taxes) an amount equal to 10 

* Chapter XII., Section 11, p. 188, 



126 THE ABCOF TAXATION 

per cent of the assessed valuation of the buildings, to 
cover interest, insurance, repairs, and depreciation. 
Twenty-five specimen estates in Lawrence, Scituate, 
Clinton, and Whitman, Mass., show ratios, thus cal- 
culated, as follows: 

25 estates . . average tax rate per thousand, $16.85 

C Land .... $197,828 
Assessed valuation ^ Buildings . . . 236,955 

I Total .... $434,783 

Gross rental of properties actually received by the 

owners $56,067 

Taxes (on $434,783, at $16.85 P er thousand) . . 7,325 



Net rental after paying all taxes .... $48,742 
Less 10 per cent on buildings ($236,955) for interest, 

insurance, repairs, and depreciation . . . 23,695 

Net income from land alone (equalling 12^ per 

cent on $197,828) $25,047 

This income is 5 per cent return on an indicated net 

value of at least $500,940 

Instead of less than 40 per cent of that amount, or 

the amount at which the land is assessed . . $197,828 

Leaving out the City of Lawrence, the ratio for the 
three smaller communities of Scituate, Clinton, and 
Whitman averages only 30 per cent. 

The figures for the above twenty-five estates in detail 
are as follows: 

IN LAWRENCE, A COTTON MANUFACTURING CITY OF 
70,000 INHABITANTS 

Of seven estates the several assessed valuations were 
respectively 72, 67, 62, 48, 42, 38, and 15 per cent 



THE SINGLE TAX AND THE FARMER 127 

of the net value. The average assessed valuation was 
48 per cent of the net land value. 

IN SCITUATE, MASS., A SHORE TOWN OF 2,6oO 
INHABITANTS 

Of four estates the several assessed valuations were 
respectively 52J, 50, 48, and 13 per cent of the net 
value. The average assessed valuation was 37^ per 
cent of the net land value. 

IN CLINTON, A MANUFACTURING TOWN OF 13,000 
INHABITANTS 

Of five estates the several assessed valuations were 
respectively 38, 37, 34^, 27J, and 22J per cent of the 
net value. The average assessed valuation was 32 
per cent of the net land value. 

IN WHITMAN, A SHOE MANUFACTURING TOWN OF 6,500 
INHABITANTS 

Of nine estates the several assessed valuations were 
respectively 83, 62, 45^, 43, 32, 27, 23, 19, and 14 per 
cent of the net value. The average assessed valuation 
was 21 per cent of the net land value. 

If Mr. Shearman's estimate of the overvaluation of 
farm lands is approximately correct, and if the fore- 
going illustrations of undervaluation of municipal lands 
are fairly representative of general conditions, then 
the conclusion seems inevitable that the farmer 
pays more than six times as much tax on every 
$1,000 of unimproved land value as does the villager. 



128 THE A B C OF TAXATION 

In other words upon every $1,000 unimproved or 
site value of his land — 

The farmer pays on $2,500, or two and a half times the 
actual value, say at $20 a thousand, a tax of. . $50 

The villager pays on $400 which is 40 per cent of the 
actual value, at $20 a thousand . . . . $8 

Under the single tax each would pay the same. 
Should the Farmer Be Taxed on Fertility 

But the story of deduction is not yet done. The 
question remains whether even the whole unimproved 
value of the land is properly taxable? There is 
respectable economic opinion* to the effect that 
fertility is not a social but an individual product; 
that it is the result of individual labour expended upon 

* "Treat the land as mere situation and ascertain what would be its value 
if the fertility of the soil were exhausted. The value of the soil itself will be the 
cost which would be necessary to bring it up from a state of exhaustion to its 
existing state of fertility. The valuing of improvements will remain as it is at 
present. We shall then have three items for the assessor to ascertain, namely, 
land, soil, and improvements. The first is a social value based on a market 
surplus, which is true rent. The second and third are individual values, the 
product of effort and abstinence. The first is individually unearned, but 
socially earned; the second and third are individually earned. . . . 

"If the single taxers will work out both a theoretical and a practical system 
by which the situation value of agricultural land can be identified with the 
site value of urban land, and by which the fertility of the soil can be identified 
with capital, the prospects are good for winning over both the economists and 
the farmers." — Professor John R. Commons, University of Wisconsin, in The 
Public, March 21, 1908. 

"When studying the phenomenon of land rent, urban land and land used 
in manufacture and commerce rather than that utilised for agricultural purposes 
should be considered. Writers who persist in studying agricultural rents are 
investigating the more obscure manifestations of rent phenomena. 
The true function of all land is, in fact, reduced to that of land in a city; namely, 
to that of furnishing a site upon which to do business. The value of the site 
depends upon the 'market opportunity' which it offers. . . . Land in its 
proper sense furnishes standing room and situation with regard to markets. 
According to this definition, land performs the same function in agriculture as 
for all non-agricultural purposes." Professor Frank T. Carlton, Albion College, 
Quarterly Journal of Economics, November, 1907. 



THE SINGLE TAX AND THE FARMER 129 

the land; and that the amount paid for the fertility 
of land, as distinct from its situation, is interest on 
capital invested, rather than a true rent. If this 
opinion be sound, and I strongly incline to the belief 
that it will ultimately prevail, then it would be a grate- 
ful simplification of the problem and would operate 
greatly to the benefit of the farmer if in taxation the 
element of fertility were to be entirely disregarded. 

Since, then, the farm land of Massachusetts, as already 
shown, accounts for only one-tenth of the assessed 
land value of the whole state, and since the unimproved 
land value, which alone would be taxable under the 
single tax, is less than 50 per cent of the assessed 
valuation, or one-twentieth of the whole, it follows that 
the value of fertility as a contributor to rent is not only 
a debatable value, but almost a negligible factor in the 
diminishing twentieth of the taxation problem. 

The Minor Importance of Agricultural Rent 

Search in the principal authorities shows that in the 
treatment of rent about fourteen times as much space 
has been devoted by them to agricultural as to urban 
rent.* The Massachusetts valuations for 1907 offer a 
marked illustration that actual conditions call for an 
apportionment the very reverse of this academic 
treatment of the subject. Thus: 

ASSESSED VALUATIONS LAND BUILDINGS TOTAL 

33 cities .... $1,088,329,177 $998,896,745 $2,087,225,922 
37 large towns . . 139,965,083 178,810,787 318,775,870 



70 cities and towns . $1,228,294,260 $1,177,707,532 $2,406,001,792 
284 small towns . . 123,986,089 216,017,954 340,004,043 



354 cities an d towns . $1,352,280,349 $1,393,725,486 $2,746,005,835 
* For details see Appendix C, 



130 THE A B C OF TAXATION 

Thus the land valuations of the 284 small towns 
($123,986,089) and of the 70 cities and large towns 
($1,228,294,260) are seen to be about in the ratio of 
one to ten. Nor must it be overlooked, that there is a 
larger proportion of urban property in small towns 
than of farm property in the large ones. The state 
census, which gives farm values by themselves, corro- 
borates the above estimate that the Massachusetts 
farm land value left for the agricultural illustration of 
Ricardo's law of rent does not exceed one-tenth of the 
assessed land value of the whole state. 

Putting the foregoing statements together — that 
is, considering at once the relative weight assigned 
to the two, as indicated by the treatment of the 
authorities, and the relative importance of the subjects 
— we are confronted with the spectacle of fourteen 
times too much attention given for a hundred years to 
ten times too small a matter. Proceeding now to the 
multiplication of fourteen by ten, we are brought face to 
face with the mathematical conclusion that in order to 
restore a lost equilibrium, the schools might reasonably 
from now on give one hundred and forty times more 
study to the subject of urban or city rent than they 
have been in the habit of doing in the past. 

This extravagant conclusion is set forth in the hope 
that it may prove a magnet that shall draw present 
attention away from agricultural ground rent, which 
may almost be ignored, and fix it upon the fifty-five 
millions of ground rent in Boston, which the people pay 
yearly for the use of its land; upon the one hundred 
and fifty or two hundred millions of ground rent in 
Greater New York; upon the two or three thousand 
millions of ground rent in the United States ; and upon 



THE SINGLE TAX AND THE FARMER 131 

the billions of franchise values which in recent years 
have sprung up all around us like gourds in the night. 

Confronted, as we are to-day, by such acute condi- 
tions, we ask you to pardon whatever may seem like 
impatience with a theory that has dealt so laboriously 
with the cuticle instead of with the heart of production. 

We seek a proper understanding and economic 
treatment of this vast river of ground rent, which, like 
a great Mississippi, drains every field of industry, labour 
and capital, wages and interest, in the whole country 
around. Our earnest contention is that to such wise 
treatment we must look for the correction of most that 
is now wrong in the distribution of wealth. Out of 
this vast current of ground rent, we would provide for 
all public need. 



Chapter X 

PUBLIC UTILITIES — REGULATION BY 
TAXATION 

THE following thoughts are prompted by a desire 
to make some contribution, however small, to 
the elucidation of a problem that to-day is clamouring 
for solution. The chapter is a first essay at the subject 
and contains tentative views as well as settled opinions. 
In this country of ours, in the last half century, have 
grown up new and great public utility undertakings, 
some of which in a short generation have taken on stu- 
pendous proportions. Their nature is neither wholly 
public nor wholly private, but partakes in differing 
ratio of both, and is best described as quasi-public. 

Ownership or Regulation 

It is admitted that one of two things must come, 
viz., either these public utilities must be owned by the 
public, or they must be regulated by law. 

Public ownership, it is objected, may be all right 
under comparatively pure civic conditions, as in Swit- 
zerland or in Glasgow, but public ownership is not safe 
where there is graft. Of taxation it can be asserted 
that it is likely to be safe and sane, graft or no graft. 

Thus a conservative public hesitates to accept public 
ownership as the right way out, for a country so young 
and expanding as ours, until a higher standard of civic 
virtue and administrative capacity is attained, prefer- 

*3 2 



REGULATION OF PUBLIC UTILITIES 133 

ring to endure the ills of monopoly rather than hazard 
what seems a gigantic experiment. Yet, considering 
the great advance already made by the city and state 
of New York* in the regulation of public utilities, it is 
difficult to believe that the people will not hold fast to 
what they have now obtained. 

For one I do not incline to ownership, though I do 
not pretend to be wise enough to reach a sure decision. 
Fortunately, it does not appear to me immediately 
necessary to make such choice. There is one good 
way easily open for its determination, viz., the com- 
parative test of time. That the employment of taxa- 
tion, as one instrument ready-made and close at hand, 
is wise, I have not a doubt. 

The astonishing thing is that economists, legislators, 
and newspapers, in their opposition to ownership of 
certain monopolies, do not more prominently suggest 
and discuss, even if they are not ready to advocate, 
the compromise alternative to ownership. How else 
can the opposition to public ownership head off its 
coming better than by advocating taxation in its stead, 
and why not be as persistent in experiments of taxation 
as of ownership, thus contributing to the only possible 
solution — experimental test and demonstration — 
the survival of the fittest ? The true system when found 
will be the one that bears the supreme test of furnish- 
ing a maximum service at a minimum cost. 

Legislature or Commission 

If, in the course of events, it should appear that public 
regulation is preferred to public ownership, and there- 



*See Reports of Public Service Commission, First and Second Districts, 
for the six months ending December 31, 1907. 



134 THE A B C OF TAXATION 

fore should have the right of way, so to speak, in public 
consideration, then the next question is : 

Shall it be regulation by Legislature or regulation by 
Commission? 

The Legislature 

Considerable effort has been recently directed, 
notably in the mooted question of the New Haven and 
Boston & Maine merger, along the line of regulation by 
legislation, but it must be admitted that at best 
legislative regulation, being uninformed and uninspired, 
cannot be otherwise than arbitrary, unaccommodating, 
undiscriminating. 

Perhaps no better preparation can be made for treat- 
ing the problem than to endeavour to define to ourselves 
as clearly as possible the nature of the task proposed. 

What are some of the matters for which regulation, 
wisely or unwisely, is invoked? First and indis- 
pensable are public audit and public inspection; the 
questions of the capitalisation of franchises, and the 
capitalisation of earnings, which may or may not be 
made subject to a general law : then follow the problems 
of mergers, absorptions, extensions, connections, com- 
mon use of tracks, and pooling; the question of rates 
and rebates, standard of equipment, strikes and wages ; 
exploitation of every kind, including the pocketing or 
sequestration of valuable franchises or patents; the 
vicious insurance plan of control of stock to secure 
control of salaries ; the just attribution of dividends to 
capital and profits to skill; valuation of property; 
valuation of franchises; and lastly, like the speed 
governor on the engine, taxation of the franchise. 

To frame a creditable statute to cover all these par- 



REGULATION OF PUBLIC UTILITIES 135 

ticular features would be an all engrossing occupation 
for legislators. To make a specific law for each class and 
case would seem to be an impossible undertaking. The 
Legislature of Massachusetts, which ranks high in 
intelligence, alertness, and honesty, is to-day struggling 
with the New Haven and Boston & Maine merger, and 
I venture to say that not a single legislator feels himself 
competent to the the task. If all similar questions 
required the action of the legislature, what would 
become of the docket and the time of legislators? 

The Commission 

The already established trend toward regulation by 
national or state commission, to which it is proposed 
that the exercise of regulative governmental power 
shall be delegated, brings us to a consideration some- 
what in detail of the reasons for, and the possibilities 
of, the commission idea as applied to the regulation, 
under statute, of special franchises or public utilities, 
either by rate making, by taxation, or by any other 
means whatsoever. 

Mr. Henry Clews voices a pregnant truth when he 
says that a large part of the gross evils in trusts and 
syndicates and public service corporations are traceable 
to the fact that "legislatures have not kept pace with 
national progress." Similarly, President Woodrow 
Wilson of Princeton University, says: 

The corporation lawyers of this country know what is going 
on; the legislators do not. I want to say to all corporation 
lawyers, ''if you would save the corporation, you will come 
out from cover and tell the legislators what is needed. You 
know what is needed; they don't. By telling them you will 
save the corporation. If you don't you will have the mob at 
its doors in a decade." 



136 THE A B C OF TAXATION 

In these public service corporations the public is a 
recognised partner, holding, through the franchise, 
perhaps a minor interest, possibly a major interest. 
The private interest in these partnerships is adminis- 
tered by men skilful, alert, of life-long experience, 
masters of their art. Of the public's interest, which 
has too long or too often been that of a silent partner, 
the Legislature is the constitutional representative. 
But legislative bodies, by reason of the method of their 
selection, their short terms, and by their limited and 
varied experience, are disqualified to cope directly 
with the specialised ability and experience of the 
private administration. Consequently the question 
has already arisen and is being answered, viz., 
why should not the interest of the people, the State, 
in the co-partnership, be represented by the ablest 
men whom the President, or the Governor, can secure 
at adequate salaries, constituting permanent com- 
missions — men who shall learn to know what is needed 
without asking corporation lawyers, who shall become 
as competent in their distinct sphere of regulation, 
including the field of taxation, as are the Hills, Harri- 
mans, Mellens, and Tuttles in what should be their own 
sole province of railway administration — commissions 
whose duty shall be to ascertain the facts, to frame the 
argument for the people's side — to defend the rights 
of the public against aggression, now inseparable from 
the situation, and to render a decision which shall 
stand as the verdict of the people's representatives. 
Not until some such harmonising agency is employed 
can it be possible for these great corporations and the 
people to get their respective rights without wrong 
to the one or the other. 



REGULATION OF PUBLIC UTILITIES 137 

The great lack to-day is not so much in the general 
wisdom and honest intention of the people or their 
representatives as it is a lack of understanding of certain 
general principles of simple application; the longer 
this understanding is deferred the harder the problem 
becomes. 

The President of Princeton says also: 

We have, in fact, turned from legal regulation to executive 
regulation. We have turned from law to personal power. 

But what we are here considering is legal regulation, 
executive regulation under law. What is needed is a 
Legislature to make wise general regulative laws, courts 
to interpret them, and a competent executive agency 
to administer them. 

Regulation by Rates, or by Taxation, or by Both 

Granting the probable establishment of the commis- 
sion method, the endeavour of this chapter is to bring 
to the front, in the railroad and other public utility 
problems, the factor of taxation: not taxation for 
revenue; not taxation of future franchises or their 
capitalised earnings ; but taxation of franchises already 
granted and exploited and capitalised, together with 
earnings already capitalised — taxation of present 
franchise earnings to bring them into the public 
treasury, instead of leaving them in private hands; 
not the taxation of the earnings of industry, but the 
appropriation by taxation of the dividends that are 
earned by the public; to the end that the profit of 
"operation" shall go to skill and enterprise, and the 
profits of the franchise shall go to the people. 

If there is one problem, National and state, that 



138 THE A B C OF TAXATION 

to-day towers above all the rest, it is the problem of 
railway regulation. The avowed aim of what is known 
as the New York Ford Amendment is to facilitate 
the raising of revenue. It contains no suggestion of 
possible extension to include the far higher and more 
difficult function of regulation. There are those who 
believe that the vexatious perplexities of this, as of all 
other public franchise problems, will prove more 
amenable to the correcting tendencies of taxation than 
to any other agency. Legislative regulation is, at best, 
clumsy and intermittent, often amounting to a weak 
confession that hostility of interests cannot be con- 
verted into harmony. Taxation is neither of these, 
but is elastic, self-adjustable, and self-operative. The 
best hope of any graft extermination must reside in 
taxation — the taxation of special privilege. Would 
any one maintain that change for the worse is possible 
in American graft of to-day? Is the public graft of a 
corporate city worse than the private graft of all its 
constituent citizens? Are not the people the victims 
in either case, and cannot graft be resisted more con- 
cretely and thus more effectively by the arm of a strong 
individual executive than by the slower instrumentali- 
ties of public administration? 

It will be profitable, in approaching the problem, to 
analyse in our own minds what is meant by the phrases 
public utilities, quasi-public corporations, semi-public 
functions. We mean, do we not, that a part is public 
business and a part is private business ; that one part 
of their capital is public, another part private; that 
one part of their function is public and one part 
individual; that one part of their value rests on fran- 
chise, the other part on equipment and operation? 



REGULATION OF PUBLIC UTILITIES 139 

The sensible question at once suggests itself: If these 
constituent parts can be separated, why not treat them 
separately? Why, in order to control the public 
agency, is it necessary to assume control over the private 
agency? Why not, through taxation, assume gradually 
the public's right to the franchise, and let improvement 
and operation remain in private hands? Or, if we are 
not quite sure that it is wise to take over both, why not 
take the franchise first, and observe the effect? And 
even if we are persuaded that it is wise to take both, 
why not take them over in the natural order, one at a 
time — the franchise first? How better can the 
municipality learn to "run" its own utilities than 
by first learning to regulate them? 

The all important preparatory step must be to 
separate as distinctly as possible regulative functions 
from administrative functions, so that the com- 
mission may not meddle with administration further 
than to set such limits, not fixed by statute, as 
bound the public's right. 

The following tentative classification is offered: 

REGULATIVE 

Audit Rebates 

Capitalisation of earnings Standard of equipment 

Capitalisation of franchises Stock control of salaries 

Exploitation of every kind Stock watering 

Inspection Taxation of the franchise 

Reduction of earnings Valuation of franchises 

Rate of taxation Valuation of property 

ADMINISTRATIVE 

Absorptions Pooling 

Common use of tracks Rate Making 

Connections Strikes 

Extensions Wages 
Mergers 



140 THE A B C OF TAXATION 

Most of the things set down under the head of 
"Regulative" clearly belong there. The regulative 
reduction of earnings would involve a reduction of 
rates in general, but the original making of specific 
rates would seem to fall inevitably within the province 
of administration, while questions of absorption, com- 
mon use of tracks, connections, extensions, mergers, 
pooling, strikes, and wages would naturally range them- 
selves under the same head; and so, too, it is respect- 
fully submitted, the most effective, definite, and delicate 
(because flexible) regulation possible is through the 
agency of a franchise tax, which can be made to extract 
annually from the corporation that part of its profits 
directly contributed by the public, leaving all its 
improvements — in other words, its plant, the capital 
devoted to its industry — free of taxation. 

The natural operation of such a system would be to 
leave to the corporation only such profits as are due 
to capital and industry actually involved, and thus to 
reduce capital stock to a fair market value, tending to 
reduce present overcapitalisation, as is now being 
effected in the City of New York. 

The trend of such taxation would be to destroy 
the motive for exploitation, by appropriating, through 
taxation, the public's share of the profits, thus tending 
to take public utilities out of politics. Taxation 
would thus be, as it were, the vital nexus between public 
and private interest, extracting annually a profit 
already accrued to the franchise alone, and operating 
like a board of equalisation between the corporation 
and the state. When this point is reached, regulation 
and administration will no more think of exploiting 
each other than would individual partners in a 



REGULATION OF PUBLIC UTILITIES 141 

business firm. Clearly, the advantage, if it be an 
advantage, temporary or permanent, of regulation 
over public ownership, is the relief of the public from 
the details and responsibilities of administration. 

The State of New York has a Public Utilities Commis- 
sion already installed by way of example, and has paved 
the way with an enabling statute to aid in the process 
of valuation for purposes of taxation of those public 
assets to which the public may rightfully lay claim. 

The Ford Law for the Taxation of Special Franchises, 
now in operation in the State of New York, was enacted 
in 1899. It was amended at a special session called 
by Governor Roosevelt, and, after five or six years' 
contest, was sustained by the Court of Appeals of the 
State of New York, and by the Supreme Court of the 
United States. 

This bill did not "prescribe any specific method of 
assessment," but simply "added certain items to the 
prescribed classes of real property, full provision for 
the assessment and taxation of which was already 
provided for by other laws in force."* 

An essential provision of the original bill was set 
forth in the following lines: "The terms, 'land,' 'real 
estate/ and 'real property,' as used in this chapter, 
include the land itself above and under water, all 
buildings and other articles and structures, sub- 
structures and superstructures, erected upon, under 
or above, or affixed to the same; all wharves and piers, 
including the value of the right to collect wharfage, 
cranage, or dockage thereon; all bridges, all telegraph 
lines, wires, poles, and appurtenances upon, above, and 
under ground; all surface, under ground, and elevated 

*" The Ford Bill," Municipal Ajfairs, June 1899, New York Reform Club, 



142 THE A B C OF TAXATION 

railroads, all railroad structures, substructures, and 
superstructures, tracks and the iron thereon ; branches, 
switches, and other fixtures permitted or authorised to 
be made, laid, or placed in, upon, above, or under any 
public or private road, street, or ground; all mains, 
pipes, and tanks laid or placed in, upon, above,or under 
any public or private street, or place for conducting 
steam, heat, water, oil, electricity, or any property, 
substance, or product capable of transportation or 
conveyance therein or that is protected thereby; all 
trees and underwood growing upon land, and all mines, 
minerals, quarries, and fossils in and under the same, 
except mines belonging to the state." 

What is known as the Ford amendment was an addi- 
tion of seven lines to the above section further elaborat- 
ing the legal definition of ' ' land " in the following words : 

Including the value of all franchises, rights, authority, or 
permission to construct, maintain, or operate, in, under, above, 
upon, or through, any streets, highways, or public places, any 
mains, pipes, tanks, conduits, or wires, with their appurtenances, 
for conducting water, steam, heat, light, power, gas, oil, or 
other substance or electricity for telegraphic, telephonic, or 
other purposes. 

These seven lines are a clear and concise restate- 
ment of the legal meaning of the term "land" as 
including the recognised "rights and privileges thereto 
pertaining." It is this definition for purposes of taxa- 
tion that is the basis of the few words of argument 
which I have to offer. It is interesting, because, 
with the sanction of the highest courts of the state 
and Nation, it defines a public franchise as "land," a 
public franchise value as "land value." 

It is evident that the public can reap its franchise 



REGULATION OF PUBLIC UTILITIES 143 

benefit either in lower fares or in franchise taxes. 
It may be assumed that the gross amount of the 
benefit is the same whichever way it is distributed. 
If the franchise is taxed, the benefit is distributed 
immediately among all the people. If rates are re- 
duced, would not the benefit, while going immediately 
to the patrons of the road, likewise be ultimately dif- 
fused among all the people? 

If the above analysis be correct, it follows that 
the question of method is one, not of justice, but of 
expediency, and it is submitted that, on the ground of 
expediency, the taxation method is preferable by 
reason of its greater simplicity. 

A too frequent change in schedule rates is at 
least inconvenient. This disadvantage finds illustration 
in the contrasted conditions of 1907 and 1908. By 
hard times and greatly reduced business, the railroads 
now seek to justify either a reduction of wages or a 
paradoxical advance of rates, in place of the reduction 
usually resulting from dull business. 

It is at this point that taxation offers itself, like the 
"ratchet" or the "follower" in the machine, to "take 
up the slack" be it more or less from year to year. 

Under the system here considered, in which regula- 
tion is supplemented by taxation, instead of a legisla- 
tive reduction of rates once in every five, ten, or twenty- 
five years, in the face of a formidable lobby, there would 
be a periodical but not too frequent general readjust- 
ment of rates, which presumably must be high enough 
to include dividends on capital actually employed; 
there would be an annual flexible regulation of the tax 
based upon the net earnings of the previous year, in 
the light of an honest, expert, and inquisitorial public 



i 4 4 THE A B C OF TAXATION 

inspection and accounting. This tax would appro- 
priate to the public such net earnings (barring a liberal 
surplus), leaving the industry itself free from tax. 
Such regulation would seem to promise all the 
benefits which could be claimed for public owner- 
ship without the dangers which would attend that 
policy. It may be that the management and the 
commission could be merged into a holding company, 
which would become, to all intents and purposes, a 
public commission with all the benefits of actual 
municipal ownership. 

By way of illustration, let it be supposed that a 
number of railway experts (not exploiters) have formed 
a company to take over the franchise and operation of 
a great railway. Although small holders of stock, these 
men naturally become the salaried officers and managers 
of the business. 

Under what must amount to a municipal guarantee 
of dividends (out of profits in good years, or out of 
surplus in bad years), the promise of a low market rate 
suffices to attract ample funds from the sale of capital 
stock, and the corporation is established as a going 
concern. 

Let it be further assumed that taxation has been 
operative, say, for a generation ; that it has gradually 
recovered to the public the value of the franchise by a 
process so tentative and even cautious as to make 
"grim financial disaster" impossible. Let it be next 
assumed that, as a result, the triple concurrent agencies, 
"private ownership," "public regulation," and "taxa- 
tion of franchise," are now in mutual and harmonious 
control of the situation, from which speculation and 
exploitation will have been eliminated as superfluous. 



REGULATION OF PUBLIC UTILITIES 145 

The problem of government regulation will be to 
harmonise the three interests of capital, management, 
and the public ; a fair profit to capital ; fair rewards for 
skill and enterprise in management; a fair return to 
the public for franchise privileges. 

Capital: A fair rate of return to capital invested in 
railways is the market rate of interest upon invest- 
ments of equal security, as fixed in competitive indus- 
tries, and this is all that capital (minus speculation) 
demands. 

When the public thus asserts its rights and enforces 
them, it must, of course, first guarantee dividends to 
the stockholders, whose property rights would other- 
wise be imperilled. 

Capital does not run the road, and hence it is not 
entitled to unusual profits due to the risks of an 
established business. Reduction of rates and taxation 
of franchise will have squeezed the water from the 
stock, and actual capital, as determined by the com- 
mission valuation, will get its "fair profit" in dividends, 
and profits will go to skill and enterprise, where they 
properly belong. The claim that a higher rate of 
dividend should be paid to capital on account of skill 
and enterprise in management is a vicious one, arising 
from the attribution to one factor of what clearly 
belongs to an entirely distinct one. 

Management: The administration of the business 
of the public service corporation would be, as now, in 
the hands of agents, superintendents, and managing 
directors, who would profit by salaries in proportion 
to their skill and brains, from $1 ,000 to $50,000, a year. 
It is these men who run the road now, and it is their 
concern to deserve profits by so doing. "Traffic men, 



146 THE A B C OF TAXATION 

as a whole, keen, adroit, and sensitive to every change 
in the industrial world, would turn to with their 
magnificent forces and abilities and work with the 
commission instead of against it." Skill and enter- 
prise, and public exigency, instead of selfishness and 
greed, would provide the initiative for legitimate 
extension and development. 

The Public: Its concern is to reap from its own 
business, delegated to private hands, a fair return, 
whether it be by lower rates or higher taxation. The 
public utilities commission, composed of men of good 
judgment and incorruptible honesty, its functions being 
supervisory rather than managerial, will fix upon a fair 
capitalisation, and will determine when and what gross 
reduction in current or accumulated earnings the 
administration should proceed to effect through the 
reduction of specific rates. By the municipalisation 
of the franchise the main motive for "stock watering 
and corporation wrecking" or for "underpaid or over- 
worked employees or false economies" will be 
destroyed. Whatever "rebates," "stock watering," 
and "corporation wrecking" survive the assumption 
of the franchise by taxation, the commission will 
prevent under statute. The value of the franchise will 
be gradually absorbed through reduction of rates, 
leaving, however, a substantial margin as the best 
possible index and basis for taxation and regulation. 
This marginal surplus would serve the purpose of 
equalising conditions from year to year, bridging over 
lean financial periods, and thus securing more fully the 
stability of the fair profits to capital invested. 

To sum up, it is my contention that, with railways 
privately owned, publicly regulated, and taxed approxi- 



REGULATION OF PUBLIC UTILITIES 147 

mately to the value of their franchises, public audit 
will increasingly protect both public and stockholder; 
public inspection will keep up the standard of the 
service; capital will get its interest; managerial skill 
and enterprise will get its compensation; the public 
will get its low rates and taxes. It will, therefore, 
appear, that franchise taxation is proposed not as a 
sole solution of the railway problem, but as a flexible, 
practicable, speedy supplement to the necessarily more 
rigid policy of regulation. 

The people should have the benefit of monopoly, and 
how can this benefit be better secured to the people 
than by charging the corporation a fair price for what 
the people do for it, leaving the corporation free to 
prosecute its private business in its own way? 



Chapter XI 
•INHERITANCE AND INCOME TAXES* 

THE proposed Presidential and Congressional plan 
of limiting fortunes and raising revenue by inheri- 
tance and income taxes may, it is suggested, be greatly 
improved by two simple modifications, viz.: (i) Let 
fortunes be taxed chiefly in the process of their accumu- 
lation, rather than at probation ; and (2) let the income 
tax be limited to those incomes which are not only 
unearned, but which are now untaxed. I ask considera- 
tion for a few of the arguments upon these points. 

It is substantially correct to say that wealth, as fast 
as produced, is divided into two parts: one part 
goes to wages of hand and brain, the other part goes 
to privilege. The greater the part that goes to wages, 
the smaller the part that goes to privilege, and vice 
versa. The prime agency in determining how large 
shall be the part that goes to privilege is the private 
appropriation of ground rent, economic rent, in its 
various forms. The essence of privilege is the law- 
given power of one man to profit at another man's 
expense. A man gets rich, not out of his earnings, 
but out of his savings. If obliged to spend all his 
earnings it is not possible for him to accumulate riches. 
The poor man rebels, not because his rich neighbour 

♦ Address before the Economic Club of Boston. Published in the New 
York Evening Post, March 6, 1907; Harper's Weekly, May 25, 1907; and the 
Outlook, August 3, 1907. 

148 



INHERITANCE AND INCOME TAXES 149 

can accumulate five hundred dollars to his one, but 
because, through the operation of this special privilege, 
it is at his, the poor man's, expense that the rich man's 
accumulation is made. Ex-Governor Long says that 
there will be discontent just so long as certain comforts 
and possessions are within the reach of one class and 
beyond the reach of another class. This discontent 
Archbishop O'Connell calls the "tumult of theenvious." 
But unprivileged men, whether unprivileged rich or 
unprivileged poor, have not far to look to find that 
discontent and envy start only where skill and enterprise 
leave off and special privilege begins. You are not 
envious of Edison or Marconi or Bessemer or railroad 
magnates, or captains of industry; you gladly accord 
them princely rewards as public benefactors. It is 
only when the people are called upon to provide an 
Edison fortune for every city and town in the country 
through privileged exaction that your discontent is 
aroused. It is only when they are required to super- 
impose upon an unprivileged steel fortune of three or 
four millions a privileged fortune of a thousand millions, 
based upon economic rent, that the shoe begins to 
pinch. It is only when the ore baron, the coal baron, 
the oil baron, the railroad baron, and the land baron 
are privileged to take ten dollars or a hundred dollars 
from their wages and add it to the monopoly price of 
coal and iron and oil that men are swayed by the 
"tumult of the envious." 

Legislation has been busy constituting criminal 
offences. The air is charged with criminal prosecution 
and conviction where fortunes have been swelled 
through violation of law. But is it not true that neither 
legislatures nor courts have seriously addressed 



150 THE A B C OF TAXATION 

themselves to stopping the continuous drain of wealth 
from the pockets of the producers into the coffers of 
the privileged? President Roosevelt in his last 
message enjoins upon Congress: "Let us not do what 
the next generation cannot undo. We have a right 
to the proper use of both the forests and the fuel during 
our lifetime, but we should not dispose of the birth- 
right of our children." Mr. Bryan, in his prediction of 
"A Great Moral Awakening," quotes the declaration of 
the United States Supreme Court that "an unjust tax 
is larceny in form of law." Unjust fortunes are, 
we claim, the fruit of unjust taxes, taxes that subtract 
from wages and make almost impossible the savings 
of labour while augmenting the fortunes of privilege; 
or, to be more exact, unjust fortunes are due to the 
absence of just taxes. 

But it is asked, what are you going to do about it? 
We say that there is just one punishment to fit the 
crime, to wit, the taxation of privilege. Tax the oil 
and the coal, the franchise, and all other forms of 
economic rent, at its fixed initial source, the land, 
which, without inquisitorial or dooming process, bears 
always the imprint of its own market valuation. Tax, 
not private ownership or corporate franchise, but the 
privilege attached thereto. The colossal error of the 
century is the private appropriation, instead of the 
taxation, of rent. This it is that makes the shopping 
district of every city a continuous battlefield for the 
business interests of her people, and every battle a 
Waterloo. 

For the prevention of unjust fortunes a natural 
process is already provided. For an equitable reduc- 
tion of accumulated fortunes artificial machinery 



INHERITANCE AND INCOME TAXES 151 

remains to be invented. President Roosevelt in his 
message confesses that the question of an income tax 
is "very intricate, delicate, and troublesome. " It 
would seem that the proposed dissipation of fortunes 
by means of an inheritance tax must prove awkward 
and of questionable justice, besides discouraging 
enterprise at its point of greatest efficiency, and in the 
midst of a beneficent career. It would discourage the 
accumulation of unprivileged fortunes, which are a 
blessing in proportion to their size. 

With all his boasted freedom, the American citizen 
cannot invent or manufacture his own principles. He 
can select them, but he cannot remould or ignore 
them. He may make permutations and combinations 
to his heart's content, but two and two will always 
make four, and the square of the hypotenuse will 
always be equal to the sum of the squares of the other 
two sides of the triangle. 

So in economics, certain fundamentals cannot be 
disregarded, as for example that the expenditure, 
enterprise, and activity of society express themselves 
in economic rent, the value of land. Whoever pays 
this rent pays, as President Roosevelt says, "for the 
protection the State gives him." Whatever of this 
rent the city gets in taxes it has bought and paid for ; 
whoever else gets any considerable part of it gets 
something for nothing. Taxes are like the wheat 
poured into the public hopper; rent, in whatever form, 
may be described as the flour that comes from the 
public mill. The privileged man, who is allowed to 
carry off the grist, eats his bread, as it were, at the tax- 
payer's expense. A tax upon rent subtracts nothing 
from wages, and any tax upon rent, however large, 



1 52 THE A B C OF TAXATION 

cannot remain a burden upon the owner beyond a 
generation at most. Land value, otherwise perishable, 
is made imperishable by public conservation ; hence the 
plea that the whole tax, whether inheritance or income, 
be gradually transferred to this one basis. Whether 
it shall be imposed lightly, as a life rate, or heavily, 
as a death rate, is merely a question of method. In 
either case it will soon cease to be a burden upon any 
one. 

Unjust fortunes are made out of ground rent accumu- 
lated and compounded. They can be perpetuated only 
by the private appropriation of ground rent; cut off 
from ground rent the public nutriment and they will 
quickly crumble and perish from the face of the earth. 

Mr. Carnegie says: "Who made the 'wealth' of the 
Manhattan Island farm? The community, the popu- 
lation, the people. Then you tell me that wealth is 
sacred. I say that the community was the leading 
partner that made that wealth. It was hundreds of 
people settling up there, thousands of people settling 
around there, and here are these millionaires. They 
have toiled not, neither have they spun." Is it not 
sensible to make such cumulative fortunes as these the 
basis of live taxation? 

President Roosevelt cannot eliminate "intricacy, 
delicacy, and troublesomeness " from his income tax 
until he learns to distinguish sharply between capital 
and privilege, between incomes that are earned and 
those that are unearned. 



Chapter XII 
THE SINGLE TAX* 

FOR the practical views which it is my privilege 
to present to this distinguished conference I beg to 
assume responsibility individually, rather than as 
representing any organised body, who thereby might 
be compromised. To express my conviction in 
ecclesiastical form I begin with the 

Credo 

(i) I believe in the single tax defined by Henry 
George in "Progress and Poverty" as "the abolition of 
all taxes save those on land values/' to be accomplished, 
as he said at Saratoga, "by the slow process of educa- 
ting men to demand it"; to which he added: "In 
thinking of details it should be remembered that we 
cannot get to the single tax at one leap, but only by 
gradual steps, which will bring experience to the settle- 
ment of details." 

(2) I believe that the amount of the single tax 
should be limited to the needs of the State for an effec- 
tive and economical administration of government. 

* Address before the National Tax Association, November 13, 1907, at 
Columbus, Ohio. See " State and Local Taxation. First National Conference, 
1907." The Macmillan Company, 1908. The reader is warned that this 
chapter is made up largely of expressions found elsewhere in the book, 
especially in the first three chapters. The only reason for its insertion is 
that it represents the author's latest resume of the subject, prepared for an 
important occasion. 

*53 



154 THE A B C OF TAXATION 

" It is a question of applying land values to common use. 
as far as they will go, or as much of them as may be 
needed, as the case may prove to be/'* 

(3) I believe in the classification, formulated by the 
New York Ford Franchise Act, of a public franchise as 
"land," and. a public franchise value as "land value," 
together with the plainly consequent converse truth, 
viz., that the site value of land is a private franchise 
value, because land depends for its value upon those 
same concrete and tangible things that give value to 
a public franchise. 

(4) I believe with Henry George that "in truth the 
right to the use of land is not a joint or common right, 
but an equal right ; the joint or common right is to rent, 
in the economic sense of the term. Therefore it is 
not necessary for the State to take land; it is only 
necessary for it to take rent." Accordingly I believe 
that a man who owns land owns the site, and every 
right and privilege, fee, title, etc., pertaining to the 
land, from zenith to earth's centre, exclusive and 
absolute, as against any other individual, but never- 
theless subject always to the right of eminent domain, 
and to the claims of the community to its share in the 
value of those rights and privileges, through the 
sovereign power of taxation. 

(5) I believe in this single tax doctrine of Henry 
George, because it is broad and catholic like the air, 
the sunshine, and all other bounties that heaven sends 
alike upon the just and the unjust. It knows no dis- 
tinction of race, denomination, party, sect, or creed. 
It knows no socialism, individualism, communism, 
anarchism, Greek, barbarian, bond, or free. The Land 

* Louis F. Post, " The Single Tax," p. 86. 



THE SINGLE TAX 155 

Question is under all these. Where it leaves off, these 
begin. A single taxer may be any of these. All these 
should be single taxers. 

The Argument 

The argument in the case may be put briefly as 
follows : 

The three economic legs necessary and sufficient 
whereupon the single tax stool may firmly stand are 
found in three generic peculiarities quite exceptional in 
their nature, which distinguish land from houses or 
other man-made products. The failure to recognise 
this distinction is, we believe, sufficient to account for 
the crookedness of present systems of taxation. Such 
a recognition must lie at the very foundation of any 
just system of the future. 

These three attributes, firmly grounded in orthodox 
economics, are, in economic language, as follows: 

a The site value of land is a social product. 

b A land tax cannot be "shifted." 

c The selling value of land is an untaxed value. 

These three fundamentals are worthy of brief 
separate consideration. 

a First in order is the fact that land value is a 
social product, i. e., it is created principally by the 
community through its activities, industries, and 
expenditures. The value of land is based primarily 
upon economic rent, defined as "what land is worth 
for use," what it would command in the open market. 

Strictly speaking this "worth for use" usually 
attaches not to the land itself, not to the earth's surface, 
not to the inherent capabilities of the soil, not to light 
and air or other bounties of nature resident in the land, 



156 THE A B C OF TAXATION 

but to scores of things exterior to the land and through 
it made available for use, so that, as applied to urban 
land, the following would be a more accurate definition : 

Ground rent is the annual value of the exclusive use 
and control of a given area of land, involving the 
enjoyment of those "rights and privileges thereto 
pertaining" which are stipulated in every title deed, 
and which, enumerated specifically, are as follows: 
right and ease of access to water, health inspection, 
sewerage, fire protection, police, schools, libraries, 
museums, parks, playgrounds, steam and electric rail- 
way service, gas and electric lighting, telegraph and 
telephone service, subways, ferries, churches, public 
schools, private schools, colleges, universities, public 
buildings — utilities which depend for their efficiency 
and economy on the character of the government; 
which collectively constitute the economic and social 
advantages of the land; and which are due to the 
presence and activity of population, and are inseparable 
therefrom, including the benefit of proximity to, and 
command of, facilities for commerce and communica- 
tion with the world — an artificial value created 
primarily through public expenditure of taxes. In 
practice, the term "land" is erroneously made to 
include destructible elements which require constant 
replenishment ; but these form no part of this economic 
advantage of situation or site value. 

Consequently ground rent may be said to result from 
at least three distinct causes, all of which are connected 
with aggregated social, as distinguished from individual, 
activity: (i) public expenditure; (2) quasi-public 
expenditure; (3) private expenditure. Thus their 
very nature and origin would seem to point to land 



THE SINGLE TAX 157 

values as peculiarly fitted to bear justly the burden of 
taxation. 

b Second in order is the fundamental fact that a 
tax upon ground rent cannot be shifted upon the 
tenant in increased rent. The argument in the case 
may run thus : Ground rent, "what land is worth for 
use," is determined not by taxation, but by demand. 
Ground rent is the gross income, what the user pays 
for the use of land ; a tax is a charge upon this income, 
similar in its nature to the incumbrance of mortgage 
interest. It is a matter of every-day knowledge that 
even though land be mortgaged nearly to its full value, 
no owner would think to rid himself of the mortgage 
interest that he has to pay through raising his tenant's 
rent by a corresponding amount. Mortgage interest 
is a lien upon land held by an individual; similarly, 
a tax may be conceived most clearly as a lien upon 
land held by the state. Both affect the relations 
between owner and mortgagor, and between owner 
and state respectively; neither has any bearing upon 
the relations between owner and tenant. "Tax" 
is simply the name of that part of the gross ground rent 
which is taken by the State in taxation, the other 
part going to the owner; the ratio these two parts bear 
to one another has no effect upon the gross rent figure, 
which is always the sum of these two parts, viz., the 
net rent plus the tax. The greater the tax the smaller 
the net rent to the owner, and vice versa. Ground 
rent is, as a rule, "all that the traffic will bear"; that 
is, the owner gets all he can for use of his land, 
whether the tax be light or heavy. Putting more 
tax upon land will not make it worth any more 
for use. If the market value of a lot of land for 



158 THE A B C OF TAXATION 

use is $300 a year, a tax of $100 will not make it 
worth $400 a year. 

These two propositions (a) that land value is a social 
product, and (b) that a tax upon land cannot be shifted 
by the owner upon his tenant in increased rent, are 
well settled in the professional mind. 

(c) Third and last is the fact, a necessary corollary 
of the second, that the selling value of land is an 
untaxed value, a proposition that has received the 
definite approval of upwards of fifty leading American 
teachers of economics and has been seriously questioned 
by but two or three of the three hundred to whom it 
has been submitted. 

Every purchaser of a piece of property knows, with- 
out argument, that he is governed as to the price he will 
pay, not by the gross income, but by the net income 
that will remain to him after all charges and incum- 
brances by way of mortgage interest or tax have been 
discharged. 

To illustrate: Assuming a piece of land worth $300 
a year for use to be free of all charges and incumbrances, 
and assuming the current rate of interest to be 5 per 
cent per annum, a purchaser would buy the lot for 
$6,000, because interest upon that sum would amount 
to the stipulated $300 a year. But assume that, on the 
contrary, it is found to be subject to a mortgage of 
$2,000, upon which the annual interest charge is $100; 
then he will buy the land, not at $6,000, but at $4,000, 
the value of the equity remaining after mortgage 
interest has been paid. 

But assume further thas this lot of land, besides 
being subject to a mortgage of $2,000, is subject also 
to an established tax of $100, which charge the pur- 



THE SINGLE TAX 159 

chaser must also assume. He will then purchase the 
land not at $4,000, but at $2,000. The tax charge of 
$100 and the mortgage interest charge of $100 respec- 
tively reduce the selling price of land by the same 
amount, $2,000. The mortgage and the tax together 
therefore reduce it by $4,000; and the purchaser will 
buy the land at $2,000, the value of the equity that 
remains after both mortgage interest and tax have 
been paid. This $2,000 is the capitalisation of the 
annual value of the lot after all charges have been met. 
The gross value is the taxed value. The net value is 
an untaxed value. 

It follows from the above too brief analysis that, 
under the present system, the selling value of land is an 
untaxed value and land owners who invest to-day are 
entirely exempt from taxation. 

As this exemption of the present owner holds true 
to-day, so it will be true in future of each new purchaser 
subsequently to the imposition of any new tax. It 
is in the very nature of things that the burden of 
a land tax cannot be made to survive a change of 
ownership. 

But when we turn to the case of the taxation of 
houses we find that no parallel appears. Whereas a 
tax upon the lot could not, in the nature of things, 
increase its annual rental, or cost for use, a similar 
tax upon the house is added directly to the annual cost 
to the user. If a house costing $6,000 to build is 
subject to a tax of $100, this amount must be paid 
annually in addition to an interest charge of $300. 
Increasing or decreasing taxation upon the lot has no 
influence upon its annual cost to the user; while 
increasing or decreasing the tax upon the house 



160 THE A B C OF TAXATION 

increases or decreases in exact proportion the annual 
cost to the user. 

The moral of this illustration is that a tenant gets 
for use annually $300 worth of land for $300, and a 
house costing $300 for $400. In other words, a house 
tax of $100 takes in taxation $100 a year of the 
user's income. A land tax of $100 takes in taxation 
no part of the income of the present owner, provided 
that he purchased the land after the tax was 
imposed. 

The beauty of this illustration is that while land 
stands for everything except the products of labour, a 
house is here made to stand as the representative of 
any and all products of individual labour, and the 
illustration thus becomes all inclusive. 

The practical exemption of the selling value of land 
is vital in its bearing upon any proposition for obtain- 
ing an increased revenue from that source, accom- 
panied by a corresponding exemption of other 
property. 

In the light of the fbregoing argument it is interesting 
to consider 

WHAT ONE CITY, THE CITY OF BOSTON, MIGHT 
HAVE DONE TO PROMOTE BUSINESS AND SECURE 
EQUITY THROUGH A SOUND AND JUST SYSTEM 
OF TAXATION 

The following estimate indicates the gigantic pro- 
portions of the factor ground rent, and its sufficiency 
to meet all reasonable costs of government economically 
administered, not only without impoverishing the land- 
owner, but without subjecting him at any time to a 



THE SINGLE TAX 161 

tax more burdensome or more continuous than that 
borne by every man that has lived in a house since a 
house tax was invented. 

The gross ground rent of the land of the City of 

Boston is by careful estimate more than . $50,000,000 

Of this amount there is already taken in taxa- 
tion 10,000,000 



Leaving to the landowners of to-day a net 

ground rent of ..... $40,000,000 

The fact that this sum amounts to $68 per 
capita, or $340 per family, will help the mind 
to grasp its magnitude as a factor in the dis- 
tribution of wealth. 

State and local taxes upon improvements, build- 
ings, personal property, and polls amount to 
something over ...... 11,000,000 

If this additional amount were taken from rent 
there would still remain to the landowners a 
balance of ...... $29,000,000 

or $48 per capita, or $240 per family. 

Coming to the consideration of the means by which 
more revenue may be gradually ''raised from the land 
and the burden of taxation made more proportionate 
and reasonable, choice may be had from a variety of 
methods. The one most frequently suggested is that 
of appropriating by taxation part or all of the future 
increase in land values. If Boston should decide to 
start to-day and take in taxation her future unearned 
increment above the present value of $653,000,000, 
the case would be exactly the same as that of some new 
community where no value has accrued, a situation 
in which the ideal justice of the single tax is so 
frequently conceded. 

If Boston had decided ten years ago upon the large 



1 62 THE A B C OF TAXATION 

annual increase of one dollar per thousand each year 
for ten years in the rate of taxation upon its land, 
coupled with similar reduction in rate upon buildings 
and personal property, that city would be raising to- 
day from its land |io per thousand more than it does 
now, or, 

Land $653,000,000, at $10, an increase of more 
than . $6,000,000 

The increase in land value in the same ten years 
was $188,000,000, 5 per cent of which is over $9,000,000 

And Boston would be taking in increased taxation 
to-day only two-thirds of its land increment for the 
same ten years. 

Under this supposition the $468,000,000 valuation 
of ten years ago would still remain untouched by 
taxation, as is now the case with substantially the whole 
$653,000,000 valuation of 1907. 

The foregoing Boston figures are submitted simply 
for purposes of illustration, not in any way as support 
of a specific recommendation. 

Important Conclusion 

If the preceding argument is valid, it establishes the 
fact of gross inequality in the incidence of taxation as 
between land values and improvement values. If 
it is admittedly wrong that present land values should 
be untaxed, how can such fiscal wrong best be righted? 
Begin at once a transfer of taxes from improvements to 
land, so gradual that two old injustices will cease for 
every new one that is begun, until this untaxed value 
is made to bear at least its proportionate burden at the 
same rate with other things. 

In conclusion I wish to emphasise this basic fact: 



THE SINGLE TAX 163 

that the burden of a land tax cannot be made to survive 
a change of ownership has in turn this corollary of its 
own, viz., that a new tax burden if imposed to-day 
would in one generation, by sale or by inheritance, 
cease to be a burden. If all taxes are finally collected 
from the landowner, he will then be the only man 
taxed. If another generation serves to let his successor 
out from under the burden, who will remain under it? 
Ground rent, economic rent, being an equivalent for 
value received, is not a burden, and if all taxes are 
ultimately taken from rent, it follows that in the course 
of two or three generations taxation may cease entirely 
from being a burden upon any one. 

If professional economists and taxation experts 
will at once, to use a nautical phrase, quit their dead 
reckoning and steer their craft by the single tax pole- 
star, time and tide will do the rest. 



PART IV. 
APPENDIX 

A. Ethics of the Single Tax : Its Breadth 

and Catholicity. 

B. Tolstoy and Henry George. 

C. The Disproportionate Treatment of 

Agricultural Rents by Economists. 

D. Statement of the Rev. Edward McGlynn. 

E. A Protest Against Unjust Taxation. 

F. Agreements in Political Economy. 

G. Details of One Hundred and Twenty 

Sales. 

H. Details of Seven Hundred and Fifty- 
one Rentals. 



ETHICS OF THE SINGLE TAX, ITS BREADTH AND CATHOLICITY* 

The appeal to reason contained in the doctrine of Henry 
George, whether as a moral philosophy, or as a system of tax- 
ation, is as universal as is the natural tax (ground rent), which 
has been in automatic and irresistible operation for centuries, 
in every civilised country under the sun. A response to this 
universal appeal only awaits the precipitation of a mass of 
relative ignorance and error now held in solution in the public 
mind regarding the author and his doctrine. 

This single tax of Henry George is broad and catholic like 
the air, the sunshine, and all other bounties that heaven 
sends alike upon the just and the unjust. It knows no dis- 
tinction of race, denomination, party, sect, or creed. It 
knows no socialism, individualism, communism, anarchism, 
Greek, barbarian, bond, or free. The land question is under 
all these. Where it leaves off, these begin. A single taxer may 
be any of these. All of these should be single taxers. 

There is in the single tax, or natural taxation, nothing of 
technical socialism, which means the assumption by society 
of functions that are primarily individual. It is rather a 
re-socialisation of that which by its own nature, in its incep- 
tion and in its growth, can be nothing but socialised, but which 
has been artificially de-socialised. There is in natural tax- 
ation no communism, if by communism is meant the com- 
pulsory pooling of the products of human labour. Such 
taxation is, however, the divine communism of the common 
enjoyment of a natural bounty bestowed upon all in common. 
There is in natural taxation no taint of the anarchism of dis- 
order. It is the recognition of the ideal anarchism of law, so 
perfect, self-adjusting, self-operating, that no external force 
is needed to carry it into execution. 

* Published in the Arena of January, 1899, 

167 



1 68 THE A B C OF TAXATION 

Its appeal is no less to the Catholic than to the Protestant; 
no more to the Christian than to the Jew or the Mohammedan, 
or the Pagan; it appeals alike to Republican and Democrat. 
Being a veritable lodestone — all attraction, no repulsion, 
and with the whole arsenal of arguments on its side — why 
should it not quickly gather to itself a victorious host ? 

Economically, the single tax proposes the displacement of 
an unjust distribution by a just distribution of wealth. Instead 
of distribution according to special privilege, and taxation 
according to ability, it proposes distribution according to 
ability, and taxation according to special privileges, chief 
of which is the private appropriation of ground rent. Morally, 
it offers itself as a fundamental bond of unity to reinforce the 
great accomplishments already made, and greater efforts to 
be made along the line of Christian agreement. 

Henry George offers to the world, not only a political philo- 
sophy that will stand the test of the gospel, but a religious 
philosophy also, that removes a great beam from the eye of 
the Christian Church, enabling it to see clearly where it now 
confesses blindness, and adding to its light a warmth and a 
radiance which the indifference of the world could not resist. 
Hence the persistent disciples of Henry George ask Christians 
to consider this doctrine; to gather to the standard of the 
single tax, and to follow that standard, not as the hound 
follows the fox, winding and redoubling upon its own trail, 
but as the bee flies, and as the carrier-pigeon flies, by the 
instinct of principle, in the straight line that lies between 
right and wrong. 

B 



Tolstoy's letter to the London Times upon the subject, 
"A Great Iniquity," is the Russian philosopher's latest utter- 

* Published in the Springfield Republican, December 10, 1905; New York 
Evening Post, December 19, 1905; and the Boston Evening Transcript, 
December 26, 1905. 



APPENDIX B 169 

ance upon the land question. In it is declared his belief that 
the greatest of all iniquities is the private ownership of land, 
together with his explicit endorsement of the single tax doctrine 
of Henry George. 

The utterances of this world-famous man, heralded far and 
near, are likely to foster the misapprehension that the aim of 
both Henry George and himself is the destruction of private 
property in land. 

I, therefore, beg, with only a word or two of comment, to 
call critical attention to one of Tolstoy's statements, leaving it 
to the reader to make his own interpretation of its meaning. 

Notwithstanding Tolstoy's unequivocal declaration that "the 
soil must be restored to the people," and his reiteration of "the 
wrong of private property in land," the conclusion that he 
would destroy the private ownership of land must be, it seems 
to me, a mistaken one, and out of harmony with both his text 
and context. Henry George specifically arraigned the institu- 
tion of private property in land, as it now exists. He con- 
demned that feature of land tenure which necessitates the inva- 
sion by taxation of the otherwise sacred right of private property 
in the products of labour in order that ground rent may con- 
tinue to inure mainly to private benefit. Hence, it must be 
submitted that what Tolstoy had in mind was private property 
in land " as now existing." The length and breadth of George's 
proposed remedy, to which Tolstoy gives full endorsement, was, 
in Mr. George's own words, "I do not propose ... to con- 
fiscate private property in land. . . but to appropriate rent 
by taxation." ("Progress and Poverty," Book VIII, Chapter 
2). In the enjoyment of every other "right and privilege" of 
tenure, the right to "own, possess, buy, sell, devise and 
bequeath" excepting only the one privilege of the private 
appropriation of rent, Mr. George's specific declaration was 
that the land owner should be left undisturbed. The following 
paragraph is from Tolstoy's "A Great Iniquity": 

"A member of the English Parliament, Labouchere, could 
publicly say, without meeting any refutation, that 'he was not 



170 THE A B C OF TAXATION 

such a visionary as Henry George; he did not propose to take 
the land from the landlords and rent it out again; what he 
was in favour of was putting a tax on land values.' That is, 
whilst attributing to George what he could not possibly have 
said, Labouchere by way of correcting these imaginary fan- 
tasies, suggested that which Henry George did indeed say/' 

Tolstoy's language thus proves beyond a possible doubt that 
he does not believe in taking the land from the landlords, and 
that he does not believe that Henry George could have said so, 
but that both are agreed in taking ground rent in taxation. 

One more thought by way of comment. George and Tolstoy, 
in common with Herbert Spencer, found, in the literature of 
the land question, in the dictionaries, and in works on political 
economy, one word, "land," standing for soil and for situation, 
and they used the one term without defining to themselves 
and to their readers the two ideas embraced in it. A clear 
distinction presents itself between what academic economists 
might call two separate "concepts," viz., "land" and "land 
value." It is as follows: "Land," defined as the earth's 
surface; the inherent capabilities of the soil; the bounties of 
nature; natural resources; "natural media"; — "land value," 
defined to be the value of "rights and privileges thereto per- 
taining," as specified in deeds of conveyance; value of the 
advantages of society and government; value of proximity; 
value due to command of facilities for commerce and com- 
munication with the world; an artificial value, not a value of 
"natural media." Land and land value as above defined 
may be contrasted by supposing one of two city lots to have a 
doorless and windowless hundred foot wall around it, or to 
have no legal right of way to and from it, in either of which 
cases the value would be that of land as a purely physical 
thing, without its social incidents. 

If any one will re-read both authors, bearing in mind to 
apply to private property in land wherever it occurs, the above 
distinction, as well as the qualifying words, "as at present 
existing," a great deal of confusion will surely be dissipated, 



APPENDIX C 171 

and sense will appear in place of what may have been pro- 
nounced foolishness. 



THE DISPROPORTIONATE TREATMENT OF AGRICULTURAL RENTS 
BY ECONOMISTS 

Has not agricultural rent, as a somewhat natural result of 
the fact that Ricardo's law of rent was specifically expressed 
and illustrated in agricultural terms, received undue attention 
from the schools, to the neglect of urban or city rent in its 
more acute forms ? 

Out of a curiosity to ascertain the actual preponderance 
accorded to agricultural over urban rent in standard economic 
treatises, the writer has instituted careful comparisons of the 
space devoted by the authorities to agricultural land and to 
urban land respectively in treating questions bearing on land 
values and land rent. The result shows that in thirty-four 
leading works of thirty authors, 42,094 lines were given to 
agricultural rents, and 2,919 lines to urban rent,* a ratio of 
fourteen to one. 

Following is the list complete: 

Author and "Work Agricultural Urban 

Text Notes Total Text Notes Total 
lines lines lines lines lines lines 

Adams, H. C, The Science of 

Finance, 1887 803 6 809 36 . . . 36 

Andrews, E. B., Institutes of Econo- 
mics, 1889 ....... 30 26 56 15 24 39 

Bullock, C. J., Introduction to the 

Study of Economics, 1897 . . . 570 3 573 81 7 88 

Cairnes, J. E., Some Leading Prin- 
ciples of Political Economy, 1874 . J 35 2 6 161 

♦Where agriculture has been considered for other purposes than value 
and rent of land, it has been omitted from the comparison. The line of 
distinction is sometimes drawn with difficulty, and in one or two cases, where 
the argument has seemed to bear equally on agricultural and urban land, it 
has been included under both heads. In view of the liability to error in such 
a comparison, this list is circulated in the hope that interested parties may 
supply any authorities which ought not to be omitted, and note any corrections 
in the readings for future publication and reference. 



172 THE A B G OF TAXATION 

Author and Work Agricultural Urban 

Text Notes Total Text Notes Total 
lines lines lines lines lines lines 

Carey, H. C, Principles of Political 

Economy, 1840 542 64 606 118 ... 118 

Chalmers, Thos., Political Economy, 

1882 3,312 205 3,517 

Clark, J. B., The Distribution of 

Wealth, 1899 M48 69 1,217 12 ... 12 

Ely, R.T., Socialism, 1894 ... 84 84 84 . . . 84 

Ely, R. T., Introduction to Political 

Economy, 1889 no ... no 48 ... 48 

Ely, R. T., Land, Labour, and Tax- 
ation, 1882 288 ... 288 192 ... 192 

Fawcett, H., Manual of Political 

Economy, 1874 1,835 5 1*840 274 ... 274 

Gide, Chas., Principles of Political 

Economy, 1896 907 16 923 117 ... 117 

Hadley,A.T., Economics, 1896. . 240 5 245 70 . . . 70 

Jevons, W. S., The Theory of Poli- 
tical Economy, 187 1 .... 301 ... 301 

Laughlin, J. L., Elements of Poli- 
tical Economy, 1896 .... 579 . . . 579 19 . . . 19 

Malthus, T. R., Nature and Progress 

of Rent, 1815 i>7°5 45 1,750 

McCulloch, J. R., Principles of Poli- 
tical Economy, 1849 • • • 1,378 60 1,438 ... 

Macleod, H. D., The Elements of 

Economics, 1886 1,257 ... 1,257 109 ... I09 

Macvane, S. M., The Working 
Principles of Political Economy, 
1890 492 5 497 78 17 95 

Marshall, Alfred, Principles of 

Economics, 1898 .... 3,557 343 3,900 40 180 202 

Mill, J. S., Principles of Political 

Economy, 1864 782 . . . 782 ... 20 20 

Nicholson, J. S., Principles of Poli- 
tical Economy, 1 901 .... 2,622 203 2,825 355 9 364 

Rae, John, Contemporary Socialism, 

1884 9 2 ° ••• 9 2 ° 2 ... 2 

Ricardo, D., Principles of Political 

Economy, 18 19 2*859 II2 2 >97 J 

Rogers, Thorold, A Manual of Poli- 
tical Economy, 1868 .... 1,010 ... 1,010 20 ... 20 

Rogers, Thorold, Six Centuries of 
Work and Wages, 1884 ... 562 ... 562 207 .. . 207 

Say, J. B., Political Economy, 1821 . 442 n 453 114 ... 114 

Seligman, E. R. A., The Shifting and 

Incidence of Taxation, 1892 . . 1*365 ... 1*365 500 6 506 

Senior, N. W., Political Economy, 

1863 45 1 • • • 45 1 





2 >755 


22 




22 


254 


4,902 


l 9 


12 


3 1 


85 


2 »3 I 3 


58 


*3 


71 




228 


38 




38 



APPENDIX D 173 

Author and work Agricultural Urban 

Text Notes Total Text Notes Total 
lines lines lines lines lines lines 

Sidgwick, H. I., Principles of Poli- 
tical Economy, 1883 .... 371 35 406 3 ... 3 

Smith, Adam, Wealth of Nations, 

1818 2,755 

Walker, F. A., Land and Rent, 1888 4,648 

Walker, F. A., Political Economy, 

1888 2,228 

Walker, Amasa, The Science of 

Wealth, 1872 228 

Total ... . . 40,516 1,578 42,094 2,611 288 2,919 



D 

DOCUMENT PRESENTED TO MGR. SATOLLI BY THE REV. EDWARD 
MCGLYNN, D.D., IN DECEMBER l8Q2 — AND BY HIS DIRECTION 
EXAMINED BY A COMMITTEE OF THE PROFESSORS OF THE 
CATHOLIC UNIVEPvSITY, AT WASHINGTON, D. C. — DECLARED 
TO CONTAIN NOTHING CONTRARY TO CATHOLIC TEACHING 

All men are endowed by the law of nature with the right 
to life and to the pursuit of happiness and therefore with the 
right to exert their energies upon those natural bounties with- 
out which labour or life is impossible. 

God has granted those natural bounties, that is to say, the 
earth, to mankind in general, so that no part of it has been 
assigned to anyone in particular, and so that the limits of 
private possession have been left to be fixed by man's own 
industry and the laws of individual peoples. 

But it is a necessary part of the liberty and dignity of man 
that man should own himself, always, of course, with perfect 
subjection to the moral law. Therefore, besides the common 
[equal] right to natural bounties, there must be by the law of 
nature private property and dominion in the fruits of industry or 
in what is produced by labour out of those natural bounties to 
which the individual may have legitimate access, that is, so 
far as he does not infringe the equal right of others or the 
common rights. 



174 THE A B C OF TAXATION 

It is a chief function of civil government to maintain equally 
sacred these two natural rights. 

It is lawful, and it is for the best interests of the individual 
and of the community and necessary for civilisation that there 
should be a division as to the use and an undisturbed, perma- 
nent, exclusive private possession of portions of the natural 
bounties, or of the land; in fact, such exclusive possession is 
necessary to the ownership, use and enjoyment by the individual 
of the fruits and products of his industry. 

But the organised community through civil government 
must always maintain the dominion over those natural bounties, 
as distinct from the products of private industry and from 
that private possession of the land which is necessary for their 
enjoyment. The maintenance of this dominion over the 
natural bounties is a primary function and duty of the organised 
community, in order to maintain the equal right of all men 
to labour for their living and for the pursuit of happiness, and 
therefore their equal right of access directly or indirectly to 
natural bounties. The assertion of this dominion by civil 
government is especially necessary because, with the very 
beginning of civil government and with the growth of civilisa- 
tion, there comes to the natural bounties, or the land, a peculiar 
and an increasing value distinct from and irrespective of the 
products of private industry existing therein. This value is 
not produced by the industry of the private possessor or pro- 
prietor but is produced by the existence of the community and 
grows with the growth and civilisation of the community. 
It is therefore called unearned increment. It is this unearned 
increment that in cities gives to lands without any improve- 
ments so great a value. This value represents and measures 
the advantages and opportunities produced by the community, 
and men, when not permitted to acquire the absolute dominion 
over such lands, will willingly pay the value of this unearned 
increment in the form of rents, just as men, when not per- 
mitted to own other men, will willingly pay wages for desired 
services. 



APPENDIX D 175 

No sooner does the organised community, or state, arise, than 
it needs revenues. This need for revenues is small at first 
while population is sparse, industry rude, and the functions 
of the state few and simple, but with growth of population and 
advance of civilisation the functions of the state increase and 
larger and larger revenues are needed. God is the author of 
society and has pre-ordained civilisation. The increasing 
need for public revenues with social advance being a natural 
God-ordained need, there must be a right way of raising them 
— some way that we can truly say is the way intended by God. 
It is clear that this right of raising public revenues must accord 
with the moral law or the law of justice. It must not con- 
flict with individual rights, it must find its means in common 
rights and common duties. By a beautiful providence, that 
may be truly called divine, since it is founded upon the nature 
of things and the nature of man, of which God is the creator, 
a fund, constantly increasing with the capacities and needs 
of society, is produced by the very growth of society itself, 
namely, the rental value of the natural bounties of which society 
retains dominion. The justice and the duty of appropriating 
this fund to public uses is apparent in that it takes nothing from 
the private property of individuals except what they will pay 
willingly as an equivalent for a value produced by the com- 
munity, which they are permitted to enjoy. The fund thus 
created is clearly by the law of justice a public fund, not merely 
because the value is a growth that comes to the natural bounties 
which God gave to the community in the beginning, but also, 
and much more, because it is a value produced by the com- 
munity itself, so that this rental value belongs to the com- 
munity by that best of titles, namely, producing, making, or 
creating. 

To permit any portion of this public property to go into pri- 
vate pockets, without a perfect equivalent being paid into the 
public treasury, would be an injustice to the community. 
Therefore the whole rental fund should be appropriated to 
common or public uses. 



176 THE A B C OF TAXATION 

This rental tax will make compulsory the adequate utilisa- 
tion of natural bounties exactly in proportion to the growth 
of the community and of civilisation, and will thus compel 
the possessors to employ labour, the demand for which will 
enable the labourer to obtain perfectly just wages. The rental 
tax fund growing by a natural law proportionately with the 
growth of civilisation will thus be sufficient for public needs 
and capacities and therefore all taxes upon industry and upon 
the products of industry may and should be abolished. While 
the tax on land values promotes industry and therefore increases 
private wealth, taxes upon industry act like a fine or a punish- 
ment inflicted upon industry — they impede and restrain and 
finally strangle it. 

In the desired condition of things land would be left in the 
private possession of individuals, with full liberty on their 
part to give, sell, or bequeath it, while the state would levy on 
it for public uses a tax that should equal the annual value of 
the land itself, irrespective of the use made of it or the improve- 
ments on it. 

The only utility of private ownership and dominion of land, 
as distinguished from possession, is the evil utility of giving 
to the owners the power to reap where they have not sown, 
to take the products of the labour of others without giving 
them an equivalent — the power to impoverish and practically 
to reduce to a species of slavery the masses of men, who are 
compelled to pay to private owners the greater part of what 
they produce for permission to live and to labour in this world, 
when they would work upon the natural bounties for their own 
account, and the power, when men work for wages, to compel 
them to compete against one another for the opportunity to 
labour, and to compel them to consent to labour for the lowest 
possible wages — wages that are by no means the equivalent 
of the new value created by the work of the labourer, but are 
barely sufficient to maintain the labourer in a miserable exis- 
tence, and even the power to deny to the labourer the oppor- 
tunity to labour at all. This is an injustice against the equal 



APPENDIX D 177 

right of all men to life and to the pursuit of happiness, a right 
based upon the brotherhood of man which is derived from the 
fatherhood of God. This is the injustice that we would 
abolish in order to abolish involuntary poverty. 

That the appropriation of the rental value of land to public 
uses in the form of a tax would abolish the injustice which has 
just been described, and thus abolish involuntary poverty, 
is clear; since in such case no one would hold lands except 
for use, and the masses of men, having free access to unoccupied 
lands, would be able to exert their labour directly upon natural 
bounties and to enjoy the full fruits and products of their 
labours, beginning to pay a portion of the fruits of their industry 
to the public treasury only when, with the growth of the com- 
munity and the extension to them of the benefits of civilisation, 
there would come to their lands a rental value distinct from 
the value of the products of their industry, which value they 
would willingly pay as the exact equivalent of the new advan- 
tages coming to them from the community; and again in such 
case men would not be compelled to work for employers for 
wages less than absolutely just wages, namely, the equivalent 
of the new value created by their labour; since men surely 
would not consent to work for unjust wages, when they could 
obtain perfectly just wages by working for themselves; and, 
finally, since, when what belongs to the community shall have 
been given to the community, the only valuable things that 
men shall own as private property will be those things that 
have been produced by private industry, the boundless desires 
and capacities of civilised human nature for good things will 
always create a demand for these good things, namely, the 
products of labour — a demand always greater than the 
supply; and therefore for the labour that produces these 
good things there will always be a demand greater than the 
supply and the labourer will be able to command perfectly 
just wages — which are a perfect equivalent in the product of 
some other person's labour for the new value which his own 
labour produces. 



178 THE A B C OF TAXATION 



ITALIAN ORIGINAL OF THE PRECEDING DOCUMENT 

Tutti gli uomini sono investiti dalla legge di natura col 
diritto alia vita ed al proseguimento del proprio bene e godono 
per conseguenza del diritto ad esercitare le proprie forze su 
quei doni della natura, senza i quali il lavoro o la vita sarebbe 
impossibile. 

Iddio ha dato questi doni della natura, cioe a dire, la terra al 
l'umana famiglia in genere di modo che nessuna parte 
di essa e stata concessa ad alcuno in particolare, e di modo 
che la determinazione dei limiti della possessione privata e 
stata lasciata alia propria industria dell' uomo ed alle leggi dei 
singoli popoli. 

Ma appartiene necessariamente alia liberta e dignita del 
l'uomo, che l'uomo sia padrone di se stesso (sui juris), sempre, 
ben s'intende, con perfetta soggezione alia legge morale. Per 
conseguenza oltre al diritto comune ai doni della natura, vi 
dev'essere per la legge della stessa natura proprieta privata 
e dominio privato nei frutti dell' industria ossia quel che il 
lavoro produce da quei doni della natura ai quali l'individuo 
abbia legittimo accesso, cioe a dire, in quanto egli non infrange 
l'ugual diritto deglialtri ossia i diritti comuni. 

Una funzione capitale del governo civile si e di mantenere 
ugualmente saldi questi due diritti naturali. 

Egli e lecito non solamente ma e per il miglior bene del 
l'individuo e della comunita ed e necessario per la civilta che 
vi sia divisione in quanto all' uso di porzione dei doni della 
natura ossia della terra, e possessione privata dei medesimi, 
pacifica, permanente ed esclusiva; e diffatti, questa possessione 
esclusiva e necessaria acciocche l'individuo possa godere il 
dominio e l'uso dei frutti e prodotti della propria industria. 

Ma la comunita organizzata per mezzo del governo civile 
deve sempre mantenere il dominio sopra quei doni della natura, 
affine di mantenere l'ugual diritto di tutti gli uomini a lavorare 
per mantenere la propria vita e per proseguire il proprio bene 'e 



APPENDIX D 179 

conseguentemente a mantenere il Ioro diritto di aver accesso 
direttamente o indirettamente ai doni della natura. L'asserzione 
pratica di questo dominio per parte del governo civile, e 
necessaria per la ragione che col primo cominciamento del 
governo civile e coll' incremento della civilta vi arriva ai doni 
della natura ossia della terra un valore peculiare ognora cres- 
cente, ben distinto dai prodotti dell' industria privata esistenti 
su di tali terreni e senza alcun riguardo ai medesimi. Questo 
valore non e gia prodotto dall* industria del possessore o pro- 
prietario privato, ma bensi e esso prodotto dall' esistenza della 
comunita e cresce mano a mano coll' aumento e colla crescente 
civilta della comunita istessa. Ed e percio che questo valore 
vien chiamato col nome d'incremento avventizio e non guadag- 
nato. E, da questo incremento avventizio e non guadagnato 
che nelle citta, per esempio, deriva ai terreni senza alcun mig- 
lioramento [come case o altro] un si grosso valore. Questo 
valore rappresenta e misura le opportunity ed i vantaggi prodotti 
dalla comunita, e quando agli uomini non sia permesso di 
acquistare l'assoluto dominio sopra tali terreni, volontieri 
pagheranno essi il valore di questo incremento avventizio nella 
forma del prezzo d'amtto, precisamente come, quando agli 
uomini non sia permesso d'impossessarsi di altri uomini, 
pagheranno essi volontieri una mercede per i servigi che si 
richieggono. 

Appena nasce la comunita organizzata, ossia lo Stato, che 
abbisogna essa di entrate. Questo bisogno di entrate e tenuissimo 
sul bel principio mentre la popolazione e tuttora scarsissima, 
l'industria e rozza e le funzioni dello Stato sono poche e semplici, 
ma coll' aumento della popolazione e col progresso della civilta 
si aumentano le funzioni dello Stato e vi e bisogno di sempre 
piu grandi entrate. Dio e Tautore della societa ed ha pre- 
ordinato la civilta. II bisogno di pubbliche entrate crescenti 
sempre col progresso sociale essendo un bisogno naturale 
divinamente ordinato, vi dev'essere una via giusta e diritta di 
riscuoterle, qualche via della quale possiamo dire con verita che 
essa fu nella intenzione divina. E cosa chiara che questa via> 



180 THE A B C OF TAXATION 

giusta e dir-itta di riscuotere le entrate pubbliche, dev'essere in 
accordo colla legge morale ossia la legge della giustizia. Non 
dovra essa stare in conflitto coi diritti delF individuo e dovra 
trovare i suoi mezzi nei comuni diritti e nei comuni doveri. 
Per una bella provvidenza, che puo chiamarsi Divina (giacche 
e essa fondata sulla natura delle cose e sulla natura dell' uomo 
della quale Dio e il creatore), un fondo di risorse, crescente 
costantemente a misura della capacita e dei bisogni della societa, 
vien prodotto dall* istesso aumento della societa medesima, 
cioe a dire, le entrate da riscuotersi dai valori dei beni che sono 
puramente doni della natura, e dei quali la societa ritiene ognora 
il dominio. Che 1'appropriazione di questo fondo di risorse 
ad usi pubblici sia e giusta e doverosa, apparisce evidentemente 
da cio che esso nulla piglia dalla proprieta privata degl' individui 
se non quello che essi pagheranno volontieri come un equivalente 
a quel valore prodotto dalla comunita e del quale e lasciata 
agl' individui libera facolta di godere. II fondo creato in questa 
maniera e evidentemente per la legge di giustizia un fondo 
pubblico, non solamente perche questo valore e un aumento 
non guadagnato ed avventizio ai doni di natura i quali furono 
dal bel principio dati alia comunita da Dio, ma eziandio e 
vieppiu per la ragione che esso e un valore prodotto dalla 
comunita istessa, di modo che questa rendita, riscossa dal valore 
fondiario, appartiene alia comunita per il piu giusto di tutti i 
titoli, cioe a dire, dal produrre, dal fare o dal creare. II 
permettere che alcuna porzione di questa proprieta pubblica 
vada nelle tasche di privati senza che si paghi al tesoro pubblico 
un perfetto equivalente sarebbe un ingiustizia contro i diritti 
della comunita. Per conseguenza tutto il valore fondiario 
dev'essere appropriato ad usi pubblici o comuni. 

La riscossione di questa imposta fondiaria fara. si che sia 
giuoco forza utilizzare adequatamente i beni offerti dalla natura, 
esattamente in proporzione all' incremento della comunita e 
della civilta, e cosi costringera i possessori ad impiegare il lavoro 
proprio o d'altrui di modo che i lavoranti che si offriranno in 
corrispondenza alia domanda, potranno ottenere la mercede 



APPENDIX D 181 

precisa richiesta dalla giustizia. La entrata proveniente dal 
Timposta sui valori fondiari, crescente per forza di d'una legge 
naturale proporzionatamente all' incremento della popolazione 
e della civilta, sara percio suffciente a tutti i bisogni pubblici 
ed alle pubbliche capacita, e per questa ragione tutte le imposte 
sull' industria e sui prodotti dell' industria potranno essere 
abolite, e si dovrebbero abolire. Mentre Timposta sui valori 
dei terreni promuove l'industria e percio aumenta la ricchezza 
privata, le imposte sull' industria hanno la forza d'una multa o 
d'una punizione inflitta all' industria, la impediscono, la ristrin- 
gono e finalmente la strangolano. 

In questa condizione di cose i terreni sarebbero Iasciati 
nella possessione privata di invidui, con piena liberta da loro 
parte di donare, di vendere o di lasciare agli eredi, e lo stato da 
altra parte riscuoterebbe per usi pubblici una rendita in forma 
di imposta che equivarrebbe al valore annuo dei medesimi, 
terreni senza aver riguardo all 'uso che ne facciano od ai 
miglioramenti che vi producono. 

L'unica utilita della proprieta privata ossia il dominio privato 
del terreno, in quanto si distingue dalla possessione od occupa- 
zione, si e la mala utilita del dare ai proprietari il potere di 
mietere dove non hanno seminato, di pigliare i prodotti del 
l'altrui lavoro senza dare a loro un compenso — il potere di 
impoverire le masse degli uomini e di ridurle a quel che e 
praticamente una specie di schiavitu; dacche sono essi costretti 
a pagare a proprietari privati la piu gran parte di quello che 
producono, e cio devono dare per il permesso di vivere in questo 
mondo e di esercitarvi il loro lavoro, quando essi vogliono 
lavorare direttamente sui bene naturale — il terreno — per 
conto proprio; ed il potere di costringere gli uomini che lavorano 
per una mercede, di far a gara l'uno contro l'altro, per l'opportu- 
nita di lavorare — acconsentendo cosi a lavorare per la piu tenue 
mercede — una mercede nullamente equivalente al nuovo 
valore creato dall 'opera del lavorante ma che e semplicemente 
ed appena sufficients a mantenere il lavorante in una miserabile 
esistenza — il potere finalmente di negare del tutto al lavorante 



1 82 THE A B C OF TAXATION 

l'opportunita di impiegare il suo lavoro. Questo e un ingiu- 
stizia contro il diritto uguale di tutti gli uomini alia vita ed al 
proseguimento della propria felicita — un diritto fondato sulla 
fratelianza degli uomini, la quale e derivata dalla paternita di 
Dio. Questo si e la ingiustizia che noi vorremmo abolire affine 
di abolire la poverta involontaria. 

Che l'appropriazione del valore avventizio e non guadagnato 
del terreno ad usi pubblici nella forma di una imposta, varrebbe 
bene ad abolire la ingiustizia la quale or ora abbiamo dimostrata 
e per conseguenza ad abolire la poverta involontaria, apparisce 
chiaramente; giacche in tal caso nessuno occuperebbe dei 
terreni se non per utilizzarli e le masse degli uomini, avendo 
libero accesso ai terreni non-occupati, sarebbero in istato di 
esercitare il loro lavoro sui beni della natura e di godere appieno 
dei frutti e dei prodotti del proprio lavoro, allora solamente 
cominciando a pagare una porzione dei frutti della propria 
industria al pubblico erario quando, coll' aumento della com- 
unita e colP estensione a loro dei benefizi della civilta, deriverebbe 
ai loro terreni un valore fondiario di rendita distinto dai prodotti 
della loro industria il qual valore essi pagherebbero volontieri 
come l'esatto equivalente dei nuovi vantaggi a loro derivanti 
dalla comunita; e dippiu in tal caso, non sarebbero costretti 
gli nomini a lavorare per padroni per una mercede minore di 
quella che e assolutamente la giusta mercede, cioe, l'equivalente 
del nuovo valore creato dal loro lavoro; imperciocche gli 
uomini certamente non acconsentirebbero a lavorere per una 
ingiusta mercede, quando essi potessero ottenere una mercede 
del tutto giusta lavorando per proprio conto; e finalmente 
giacche quando quel che appartiene alia comunita sara stato 
dato alia comunita, allora le sole cose di valore che gli uomini 
possederanno come proprieta privata saranno quelle cose che 
sono state prodotte dalla privata industria, i desideri e le 
capacita senza limiti della incivilita umana natura, di usare 
e godere dei beni, creera una domanda per tali beni che sono 
i prodotti del lavoro, una domanda sempre maggiore del 
l'offerta; e percib vi sara sempre, per quel lavoro che produce 



APPENDIX D 183 

questi beni, una domanda maggiore del l'offerta e cosi il lavo- 
rante potra pretendere efFettivamente alia mercede veramente 
giusta, la quale sara un preciso equivalente reso dal prodotto 
del l'altrui lavoro, in contraccambio del nuovo valore che 
egli produce col lavoro proprio. 



There has recently appeared from the pen of a Catholic lay- 
man a book* in which the author tries to extenuate the import- 
ance of Monsignor Satolli's decision by intimating that it 
represents only the simple individual opinion of the four pro- 
fessors. Loyalty to truth dictates that this criticism should be 
here offset by some pertinent facts in the case. 

Monsignor Satolli in a former visit to the United States in 1889 
and as the guest of Archbishop Corrigan, had ample opportunity 
for investigation of the land question from the viewpoint of 
the United States and of Rome. Hence he had four years of 
time in which he might have made a preliminary examina- 
tion. Monsignor Satolli was credited with having been one of 
those consulted when the Pope's Encyclical, Rerum Nova- 
rum, of May 15, 1891, was in preparation, and was thereby 
the better able to judge what was in accord or in conflict 
with it. 

Among the important duties of his mission was to bring to a 
satisfactory conclusion what was then known as the McGlynn 
Controversy. Dr. McGlynn, at the request of the Apostolic 
Delegate, submitted to him through his counsel, Dr. Burtsell, 
a statement in Italian of his views on the subject of private 
property in land. On this statement Monsignor Satolli consulted 
four of the professors of the Catholic University. The decision 
of Monsignor Satolli that there was nothing contrary to 
Catholic doctrine in the opinions of Dr. McGlynn as exhibited 

"♦Fundamental Fallacy of Socialism," Arthur Preuss, published by 
B. Herder, St. Louis, Mo., 1908. 



1 84 THE A B C OF TAXATION 

in that statement was official, and was followed by the return of 
Dr. McGlynn to active duty. 



E 

A PROTEST AGAINST UNJUST TAXATION 

The following remarks were addressed by the author to the 
assessors of the City of Newton, Mass., less with the idea of 
securing an economic advantage through a deduction of his tax 
payments than by reason of a hope that he might strike a blow 
for the acceptance of single tax principles of taxation. 

"Gentlemen — I am assessed on my house lot, Newtonville 
Avenue and Bellevue Street, 20,264 square feet, at fifteen cents a 
foot; on additional land, less desirable, facing on Lewis 
Terrace, 17,496 feet, valued at ten cents a foot, in all — 

On land, $4,750 at $16.20 per thousand $76.95 

On house, $9,ooo~at $16.20 per thousand 145.80 

Personal estate and water tax . . . . . . . 74-40 

Total $297.15 

"To the valuation of the land, which is fair and reasonable, 
I make no objection. Against so large a tax upon my house I 
desire to protest, and I respectfully ask its abatement not only 
because the actual cost of the house was fictitious and exag- 
gerated beyond any true market value, but because its selling 
value is greatly depreciated by the surroundings, which to-day 
would not justify a house of much more than half its pretensions. 
Not only have I by building my house contributed liberally to 
create the value of my neighbours' land, but the best part of my 
substance has in the last ten or a dozen years been largely 
wasted in trying, by private improvement and adornment of 
both house and land, to counteract the adverse influences of coal 
yards and freight yards and steam whistles. I have thus 
attempted to rescue and protect my neighbours' land values just 



APPENDIX E 185 

as much as my own, and mine have rapidly perished in the 
attempt. 

"I think we are all agreed that the value of the land of Newton 
is created by the whole community of Newton, with its improve- 
ments, character, activity, and its industry. Are we not also 
agreed upon the fact, equally important and more patent 
perhaps to the casual observer, viz., that this land value is 
maintained from year to year by the public expenditure of New- 
ton's taxes ? When your public service ceases or languishes, 
when you stop the care of streets, the water supply, fire depart- 
ment, or the schools, land values respond almost instantly. 
All these public expenditures of the people's money add nothing 
to the value of a house — which value is ultimately the cost of 
building another house as good — but they do add to or rather 
maintain the value of my neighbours' land and mine, which 
otherwise would rapidly depreciate in value. Why should you 
tax the decaying value of my house, to help maintain the aug- 
menting value of hundreds of other men's vacant acres, standing 
unused, just like so many idle mills supplied with the main 
shafting from nature's power house with a great city's lavish 
supplies on tap ? 

"There would be far more reason to ask me and others to pay 
taxes on our houses, if public service were at all limited to the 
needs of these houses, instead of being, as it is, vastly in excess, 
if not indeed double, that need. This public service costs the 
same for a vacant lot as it does for the adjoining similar lot with 
a $20,000 house on it. I object to being taxed to pay for the 
other man's share of this public service. 

"Thus I am asking abatement of a tax that is H upon 
improvements and personal property and js upon land, 
because it is in violation of the requirements of the constitution 
of the State of Massachusetts that all assessments shall be 'pro- 
portionate and reasonable'; because it is more than my propor- 
tionate and reasonable share of the total assessment — unequal 
taxation for equal benefits. 

"Now for what purpose do you lay taxes except for public 



1 86 THE A B C OF TAXATION 

service ? What more reasonable than to lay these taxes in 
proportion to public service rendered, in proportion to benefits 
bestowed; that is, in proportion to special privileges enjoyed ? 
The land value is a perfect reflection of this constant service. 
The same is not true of houses or other improvements or personal 
property. 

"Thus I am constrained to ask by what canon of taxation do 
you tax me so far beyond the public service that I enjoy as 
indicated in the market value of my land ? Surely it is not taxa- 
tion according to ability, but rather according to a spendthrift 
disposition. My house adds not a dollar to the city's expense 
on my account. That expense would be the same if my house 
should burn down. The same is true of my personal estate. 
So large a tax cannot be on account of special privilege. It is 
no special privilege to me to border on a coal yard and a freight 
yard and a railroad. It is no special privilege to me that while 
the woods of Newton are full of concrete sidewalks, I have lived 
twenty-four years in the vain hope of access to either the Newton 
or Newtonville station over a clean sidewalk. It is no special 
privilege that until within a very few years the sidewalk to 
Newtonville has been at seasons impassable because of mud and 
surface water ankle deep, or that to-day the sidewalk to the 
Newton station, one-half plank and the other half gravel, is only 
wide enough to accommodate people Indian file. 

"The land value is the balance or equilibrium between these 
public advantages and disadvantages. If assessed according 
to my proportionate and constitutional share of the public 
expense, my tax would be determined in this wise: as $20,927,850 
(the total land value of Newton) is to $4,750 (the value of my 
land), so is $895,915 (the total tax of Newton) to $203.35 (my 
proportionate share of that tax). I am taxed to-day $297.15, 
or $93.80 in excess of this fair amount. It is the abatement 
of this excess that I respectfully ask your honourable 
board to grant," 



APPENDIX F 187 



AGREEMENTS IN POLITICAL ECONOMY* 

[The following address, delivered at a Round Table Conference of The 
American Economic Association is thought worthy of inclusion here, because 
it is believed that the plan proposed, defended, and adopted is bound to prove 
fruitful in advancing every good cause the promotion of which depends upon 
the widespread knowledge and acceptance of sound economic opinion.] 

I feel highly honoured in having been called to the chair- 
manship of a Round Table of the American Economic Associa- 
tion for the discussion of Agreements in Political Economy, a 
topic that has long appealed to me as of the very greatest interest 
and importance. 

I have been engaged for several years in a sort of probationary 
work, known to many, perhaps to most of you — that of trying 
to elicit from economists agreement upon certain definitions and 
statements of principles, touching land value and land taxation. 

Perhaps the best illustration I can give of the plan I have in 
mind is a statement of the present fruits of this effort, imperfectly 
indicated by the following recorded canvass of opinions: 

1902. 1. Definition: Ground rent is what land is worth yes no 
for use ........ 135 o 

190a 2. Definition: Public Franchises are exclusive free 
privileges granted to one or several persons incor- 
porated, from which the mass of citizens are 
excluded. These franchises usually pertain to land, 
including as they do (to use the language of the 
New York Legislative Ford Bill) all "rights, autho- 
rity, or permission to construct, maintain, or 
operate, in, under, above, upon, or through, any 
streets, highways, or public places, any mains, 
pipes, tanks, conduits, or wires, with their appur- 
tenances, for conducting water, steam, heat, light, 
power, gas, oil, or other substance, or electricity for 
telegraphic, telephonic, or other purposes." 
Hence their classification, by the above Act, as 
"land values " maybe confirmed as correct, and 
their annual values properly classed as ground 

rent ■ 103 25 

* Paper presented at a Round Table Discussion at the Annual Meeting of the 
American Economic Association, Madison, Wis., December 28, 1907. 



1 88 THE A B G OF TAXATION 

1902. 3. A tax upon ground rent is a direct tax and cannot yes no 
be shifted ....... 108 26 

1902. 4. The selling value of land is, under present conditions 
in most American states, reduced by the capitalised 
tax that is laid upon it ..... 105 17 

1 902 . 5 . Hence the selling value of land is, to the same extent, 
an untaxed value, so far as any purchaser, subse- 
quently to the imposition of the tax, is concerned . 95 24 

1904. 6. Definition: Monopoly: Control, absolute or 
substantial, temporary or permanent, of the supply 
and hence of the price of any commodity or ser- 
vice, whether maintained (1) through control of 
of natural resources, (2) through some special and 
exclusive right or privilege conferred by law, (3) 
through combination or concert of action, or (4) by 
any other means which are not available to similar 
capital and skill in competitive hands. 86 3 

1904. 7. It would be sound public policy to make the future 

increase in ground rent a subject of special taxation. 77 10 

1906. 8. The Selling Value of Land is an Untaxed Value 

(Illustration No. 19) 59 2 

The concrete suggestion I would here offer is that, with the 
work already done for a nucleus, the same method be extended, 
corrected, improved, and adapted to include, as experience 
may justify, other, and finally perhaps all points of economic 
theory, and the practical economic rules and principles to be 
deduced from them. I would emphasise the great importance 
of such a step as a means of securing agreement on economic 
principles, and not as a method of advancing any practical 
programme of reform. 

Let it be supposed, for instance, that the association itself 
should see fit to adopt a resolution somewhat as follows: 

Whereas: This association, recognising the value of substan- 
tial agreement upon the largest possible number of definitions 
of common terms and of economic principles, commends effort 
toward the establishment and general enlargement of such 
agreement and favours response and cooperation from the 
members of the association, therefore 

Resolved: That the President is authorised to appoint a 
general committee of not more than twelve members, upon 
whose recommendation definitions and statements of principles 



APPENDIX F 189 

may be submitted to the full membership of the association 
for approval or criticism; the progress of such agreement to 
constitute an available subject of annual discussion and report 
in the proceedings of the association, and be it further resolved 
that this general committee may appoint or confirm working 
committees in various departments to conduct the necessary 
correspondence and report partial or preliminary agreements to 
the general committee.* 

An incident of such a concerted movement, as above outlined, 
might be an enthusiasm equal to or exceeding that of the recent 
Columbus Conference on Taxation, an interest that promises 
to be permanent and increasing. Work of this nature, which 
must of course be a growth, might afford pleasure as well as 
profit, and might readily enlist the interest of those who would 
make of themselves centres of agitation and development in the 
various fields of Capital, Labour, Rent, Wages, Interest, 
Taxation, Population, Production, Distribution, etc. If such 
a race is worth the running, what more appropriate than that 
the American Economic Association should set the pace ? 

It is not expected that agreements like these will be new 
discoveries, but simply old discoveries brought into stronger 
light, formulated, and subjected to continuous correction and 
perfection, through reconciliation of differences and re-state- 
ment of old agreements to conform to the latest thought. 

Such an assembly and exposition of essential principles can 
but be of inestimable profit to the student, the teacher, the 
university, and the State, compassing, as it must eventually, 
an accepted body of principles — principles that may be taught 
fearlessly by teachers old and young, experienced or 
inexperienced, leading or led, and with a confidence and 
satisfaction akin to that pervading the domain of exact science. 

On the relatively solid ground of such accepted doctrine the 

* Professors Hollander, Carver, Seager, Fetter and others spoke in approval 
of the plan as presented, Professor Carver expressing the opinion that its adop- 
tion would mark a new epoch. At a subsequent business meeting of the 
association the executive committee unanimously recommended, and the 
association adopted, the resolution without dissent, 



190 



THE A B C OF TAXATION 



college graduate will take with him to his home and into the 
concerns of life something that will be to him an armour and a 
weapon always at hand — an economic code that shall be as a 
handbook to the publicist, politician, and statesman — that 
shall make of the college men in Congress and Legislature not 
dreary followers of a groping public sentiment, or the confident 
advocates of exploded economic opinion, but instructors and 
leaders of their time. 



DETAILS OF ONE 



HUNDRED AND TWENTY 



BOSTON PROPERTY 



SALES' 



Number 1 
Estate 



Assessed 
Valuation 
of Land 

$67,200 

43>5°° 

245,000 

65,000 

77,60O 

89,500 

196,000 

42,000 

10,800 

101,500 

17,000 

33,700 

6,000 

21,200 

"5>5°° 
21,500 
22,400 

135,700 

492,000 
10,800 
49,500 
90,000 
14,300 
48,000 
68,800 

164,600 
1,800 

167,000 



Assessed 

Valuation 

of Buildings 

$75,000 
15,000 
85,000 
10,500 
22,400 

i 7j5°° 

60,000 

1 1 ,000 

4,000 

24,500 

3,000 

2,300 

2,700 

15,000 

59>5°° 

10,500 
8,000 

75,000 

232,400 

5,100 

9,000 

17,000 
2,700 
7,000 

10,000 

120,400 
2,100 

100,000 



Total 
Assessed 
Valuation 

$142,200 

58,500 

330,000 

75>5°° 

100,000 

107,000 

256,000 

53,000 

14,800 

126,000 

20,000 

36,000 

8,700 

36,200 

175,000 

32,000 

30,400 

210,700 

724,400 

15,900 

58,500 

107,000 

17,000 

55,000 

78,800 

285,000 

3>9°o 
267,000 



Price 

Indicated 

by Revenue 

Stamps 
on Deeds 

$165,000 

75,000 

625,000 

75>5°° 

120,000 

130,000 

280,000 

75,000 

20,000 

175,000 

28,000 

45,000 

8,500 

42,000 

290,000 

35>5°° 
46,000 

210,000 

925,000 
30,000 
46,500 

136,000 
21,000 
85,000 
94,000 

425,000 
3>5°° 

333* 000 



Percentage 
ot Selling 

Price Repre- 
sented by 
Valuation 

86 

78 

5 2 
100 

83 
82 

9 1 

70 

74 
72 

71 

80 
102 

86 

60 

92 

66 
100 

75 

53 
1*5 

78 

80 

64 

83 

67 
in 

80 



*For comments see page 16. 



APPENDIX G 



191 



Number of 
Estate 

29 

3° 
3 1 

3 2 
33 
34 
35 
36 
37 
38 
39 
40 

41 
42 

43 
44 
45 
46 

47 
48 

49 
5° 
5i 
5* 
53 
54 
55 
56 
57 
58 
59 
60 
61 
62 

63 
64 

65 
66 

67 
68 
69 
.70 

71 
72 

73 
74 
7$ 



Valuation 
of Land 

$14,200 

' 39>3°° 

4,200 

105,000 

29,000 

34,IOO 

79,300 

10,000 

79,300 

54,000 

25,900 

131,000 

I4,000 

7,700 

8,600 

2,000 

27,500 

9,200 

14,000 

II,0OO 

9,200 

II,500 

6,000 

4*O0 

14,300 

26,000 

5>9°° 

3,200 

17,000 

16,200 

13,300 

3,600 

9,200 

8,300 

4,000 

18,000 

7,600 

13,300 

3,600 

30,000 

65,000 

18,000 

7,800 

4,800 

18,000 

6,300 

8,800 



Assessed 

Valuation 

of Buildings 

$7,000 

II,500 

3,IOO 
25,000 

6,000 

7,000 

7,000 

3,000 
20,000 

8,000 
12,000 
28,000 
23,500 
14,900 

8,400 

7,500 
26,500 
II,8oO 
20,000 

9,000 
10,300 
56,000 
17,000 

6,IOO 
22,700 

5,000 
I2,IOO 

6,500 
27,000 
10,800 
14,000 

5,200 
II,8oO 
29,200 

6,700 
l8,000 
20,900 
20,700 

4,200 
31,000 
20,000 
I3,000 
17,000 
l6,000 
II,500 
10,700 

8,20O 



Total 
Assessed 
Valuation 

$21,200 

50,800 

7,300 

130,000 
35,000 
4I,IOO 
86,300 
13,000 
99,300 
62,000 
37,900 

159,000 
37,500 
22,6oo 
I7,000 
9,500 
54,000 
21,000 
34,000 
20,000 
19,500 
67,500 
23,000 
10,500 
37,000 
3 1 ,000 
l8,000 
9,700 
44,000 
27,000 
27,300 
8,800 
2I,00O 

37>5°° 
10,700 
36,000 
28,500 
34,000 
7,800 
61,000 
85,000 
31,000 
24,800 
20,800 
29,500 
17,000 
17,000 



Price 

Indicated 

by Revenue 

Stamps 

on Deeds 

$23,500 
6o,000 

9,500 
160,000 
35,000 
55,000 
122,000 
12,500 
135,000 
69,500 
57,000 
200,000 
39,000 
29,000 
16,500 
10,000 
65,000 
22,000 
47,500 
21,000 
22,000 
75,000 
33,000 
10,000 
42,000 
38,000 
23,500 

9,500 
47,000 
25,000 
27,000 

9,000 
22,000 
42,O0O 

9,500 
32,000 
35,000 
33,000 

9,000 
8o,000 
91,000 
38,000 
28,000 
25,000 
27,000 

i5>5°° 

22,000 



Percentage 
of Selling 
Price Repre- 
sented by- 
Valuation 

90 
84 
76 
8l 
IOO 

74 

70 

104 

73 
89 
66 

79 
96 

77 
103 

95 

83 

95 

71 

95 

88 

90 

69 
105 

88 

81 

76 
102 

93 
108 
101 

97 

95 

89 
112 
112 

81 
103 

86 

76 

93 



83 
109 
109 

77 



192 



THE A B C OF TAXATION 



Number of 
Estate 

76 

77 
78 

79 
80 
81 
82 

83 
84 

85 
86 

87 
88 

89 
90 

9 1 

92 

93 
94 
95 
96 

97 
98 

99 
100 
101 

102 
103 
104 

105 
106 
107 
108 
109 
no 
III 

112 

"3 

114 

"5 
116 
X17 
118 
119 



Assessed 
Valuation 
of Land 

$14,700 

6,200 

18,800 

IO,8oo 

6,400 

3,700 

3,600 

4,500 

1,300 

4,800 

1,000 

4,200 

2,900 

2,8oo 

I,6oo 

12,500 

I,6oo 

4,000 

3>5°° 
8,400 
1,000 
2,400 
5,800 
3,200 
3,100 
6,000 
3,600 
2,700 
30,000 
15,700 
6,300 
4,300 
5,400 
3,000 
25,200 
3,900 
6,200 
8,000 
5,600 
4,000 
4,800 
1,600 
2,000 
9,000 
8,000 



Assessed 

Valuation 

of Buildings 

$12,300 
1 5,000 
II,200 
10,200 
II,6oo 
6,800 

4>5°° 
1,200 
2,500 
8,200 

3>5°° 

10,000 
3,600 
5,000 
2,600 

64,000 
3,600 
6,500 
4,800 

25,000 
1,500 
2,900 
7,200 
5,200 
6,000 
5,200 
5,500 
6,000 

14,500 
8,000 
7,700 
7,700 
5,000 
4,000 
2,500 
9,000 
9,800 

16,000 
9,500 
5,000 
6,000 

5>4°° 

1,600 

13,000 

6,000 



Total 

Assessed 
Valuation 

$27,000 

21,200 

30,000 

21,000 

l8,000 

10,500 

8,IOO 

5,700 

3,800 

13,000 

4,500 

14,200 

6,500 

7,800 

4,200 

76,500 

5,200 

10,500 

8,300 

33>4°° 
2,500 

5>3°° 

13,000 

8 ,400 

9,100 

11,200 

9,100 

8,700 

44,500 

23,700 

14,000 

12,000 

10,400 

7,000 

27,700 

12,900 

16,000 

24,000 

15,100 

9,000 

10,800 

7,000 

3,600 

22,000 

14,000 



Price 

Indicated 

by Revenue 

Stamps 
on Deeds 

$25,000 

25,500 

29,000 

25,000 

l8,000 

10,500 

10,000 

6,500 

4,000 

15,500 

5,000 

17,000 

8,500 

7,800 

4,500 

70,000 

5,800 

I2,000 

7,000 

25,000 

2,300 

4,000 

15,000 

9,300 

8,000 

12,000 

10,000 

10,000 

45,000 

20,000 

12,000 

13,000 

11,000 

8,000 

29,000 

15,000 

l6,000 

27,000 

I2,000 

10,000 

IO,000 

5>5°o 
3»675 

27,000 
14,000 



Totals $3,758,600 $2,079,700 $5,838,300 $7,291,375 



Percentage 
of Selling 
Price Repre- 
sented by 
Valuation 

108 

83 
IO3 

84 
IOO 
IOO 

8l 

87 

95 
83 
90 

83 

76 

100 

93 
109 

89 
87 
118 

133 
108 

*3 2 

86 

90 
"3 

93 

9i 

87 

98 
118 
116 

92 

94 

87 

95 

86 



* 2 5 

90 
108 
127 

97 

81 
100 

80 



APPENDIX H 



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205 



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206 



THE A B C OF TAXATION 




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APPENDIX H 



207 



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208 



THE A B C OF TAXATION 



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APPENDIX H 



209 



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COM Nl M M « MMCO 



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212 



THE A B C OF TAXATION 



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APPENDIX H 



213 



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0V00 t^- «-< O mvo u-> vo t-- vo m 00 00 m>o m + ^Nm* ^m ww 1000 
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214 THE A B C OF TAXATION 

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INDEX 



INDEX 



Absorption of rent taxes, 41. 

Adams, H. C, on rent a social 
product, 30. 

Ames estate, Boston, 73, 74. 

Andrews, E. B., on the taxa- 
tion of rent, 12; on rent a 
social product, 29; in the 
Saratoga debate, 102. 

Aquinas, St. Thomas, on 
natural law, 104. 

Atkinson, Edward, on amount 
of the single tax, 73; on 
absolute ownership of land, 
100; explaining Henry 
George, 102. 

Bascom, John, on impossibil- 
ity of shifting rent taxes, 

34- 

Bastable, C. F., on selling 
value of land on untaxed 
value, 47. 

Boston, a single-tax calculation 
for, 18, 161 ; buildings and 
land in, 23; statistics of 
property sales in, 190-192; 
statistics of rentals in, 
193-214. 

Boylston Hotel, Boston, an 
object lesson, 22; Build- 
ing, Boston, 75. 

Buildings, taxation of, 43; 
value of, contrasted with 
value of underlying land, 
55; when to replace, 75. 



Bullock, C. J., on rent a social 

product, 29. 
Bryan, W. J., unjust taxation 

larcenous, 150. 
Burtsell, Dr. R. L., in the Mc- 

Glynn case, 183. 

Capital, increase of, retarded 
by present forms of taxa- 
tion, 58, 82; proper return 
to, in public utilities, 145. 

Carlton, Frank T., fertility of 
land an individual product, 
128. 

Carnegie, Andrew, on the 
unearned increment, 152. 

Carver, T. N., on selling value 
of land an untaxed value, 

48. 

Clark, John B., on the social 

production of rent, 10; in 

the Saratoga debate, 102. 
Cleveland, Ohio, municipal 

holding company in, 144. 
Clews, Henry, on legislative 

incompetence, 135. 
Clinton, Massachusetts, 

undervaluation of land in, 

127. 
Commission, the agency for 

regulating public utilities, 

133> 135- 
Commons, John R., fertility 
of land an individual pro- 
duct, 128. 



225 



226 



THE A B C OF TAXATION 



"Compensationists," propo- 
sals, of considered, 120. 

Constitution of Massachusetts, 
relation to single tax, 121. 

Cornhill, Boston, and the 
single tax, 79-92. 

Cotting, Uriah, 80. 

Distribution, favourably af- 
fected by rent taxation, 
11, 108, 148. 

Economists, opinions of, on 
rent a social product, 28-30; 
on impossibility of shifting 
tax on rent, 33-35; on 
selling value of land an 
untaxed value, 45-48; dis- 
proportionate treatment of 
agricultural rent, 171-1 73; 
plan to secure agreements 
among, 187-190. 

Ely, R. T., answer to single- 
tax argument, 48; objec- 
tions of, considered, 48-52. 

Exemptions, resulting from 
the single tax, 24. 

Farmers, and the single tax, 
122-131; doubly discrimin- 
ated against, 124. 

Fertility of land, not properly 
taxable, 128. 

Ford Franchise Act, 141, 154. 

Franchise, place in single tax 
theory, 109; taxation of, 
137; compared with land, 
142, 187. 

George, Henry, 95, 96, 99-100, 
101, 107, 119, 153-154-. 

Giffen, Sir Robert, on selling 
value of land an untaxed 
value, 45. 



Ground rent. See Rent. 

Hoffman, on incidence of rent 

taxation, 34. 
Houses, tax on, contrasted 

with rent taxes, 43. 
Howland Street, Boston, 

valuation, 73. 

Income tax, the single tax, a 
form of, 25; discussed, 
148-152. 

Inheritance taxation, con- 
sidered, 148-152. 

Investment in land now un- 
taxed, 24, 36-52, 188. 

Johnson, The Rev. R. J., on 
the relation of the Catholic 
Church to the single tax 
proposal, 104. 

Land, defined, 109; con- 
trasted with wealth, no; 
agricultural, overvalued, 
125; urban, undervalued, 
125; defined in the Ford 
Franchise Act, 141, 142. 

Land value, contrasted with 
land, 97, 170. 

Landlords, function of, 19. 

Lawrence, Massachusetts, 

land of, undervalued, 126. 

Leo XIII., Pope, Labour 
Encyclical, 104, 183. 

Long, John D., on social dis- 
content, 149. 

Management, earnings of, in 
public utilities, 145. 

Masonic Temple, Boston, 75. 

McGlynn, The Rev. Edward, 
defends his single tax posi- 
tion, 105, 106, 173-183; on 
the single-tax method, 107. 



INDEX 



227 



Mill, John Stuart, on taxation 
of land value increment, 
24; on rent a social pro- 
duct, 29; on impossibility 
of shifting a tax on ground 
rent, 34; on selling value 
of land an untaxed value, 
46, 47. 

Monopoly, taxation of, 27, 
no; defined, 188. 

Mortgage, effect of, on rent, 
32; compared with taxa- 
tion, 39. 

Murhard, on incidence of rent 
taxation, 34. 

Nicholson, J. S., on impos- 
sibility of shifting a tax on 
rent, 35. 

O'Connell, Archbishop, on 
social discontent, 149. 

Old Corner Book Store, Bos- 
ton, 69. 

Overvaluation of agricultural 
land, 125. 

Personal property, should be 

exempt from taxation, 116. 
Politics, and public utilities, 

140. 
Preuss, Arthur, on the Satolli 

decision in the McGlynn 

case, 183. 
Private expenditure, a source 

of rent, 13, 156. 
Property, in land, 95, not 

inconsistent with single 

tax, 96, 169, 174. 
Public expenditure, a source of 

rent, 13, 156. 
Public Library, Boston, 75. 
Public ownership, of public 

utilities, 132. 



Public utilities, regulation by 
taxation, 132-147; regula- 
tion of, in New York, 133, 
141 ; and politics, 140. 

Quasi-public expenditure, a 
source of rent, 13, 156. 

Real estate, single taxation of, 
20. 

Regulation of public utilities, 
132-147; details, 134; 
direct legislative, impos- 
sible, 136; contrasted with 
administrative, 139. 

Rent, defined, 3, 71, 156, 187; 
a social product, 3-30, 155, 
174; nature of, 4; a 
natural tax, 4, 76, 175; 
operation of, 7; species 
of, 8; office of, 9; cause of, 
11,37; maintenance of, 14; 
amount of, in Boston, 15, 
26; net and gross, 16; tax 
on, cannot be shifted, 
3 1 -35> 1 55> 1 $%'> sufficiency 
of, for public needs, 74, 
154; reflects the movables 
on the land, 82; agricul- 
tural, overemphasised by 
economists, 129, 171-173. 

Rental value, distinguished 
from capital value, 3. 

Rerum Novarum, the Pope's 
Encyclical, 183. 

Ricardo, David, on impos- 
sibility of shifting a tax on 
ground rent, 33, 34. 

Rogers, J. E. Thorold, on 
impossibility of shifting a 
tax on rent, 34. 

Roosevelt, Theodore, 141, 150, 

151. ^ 



228 



THE A B G OF TAXATION 



Sartorius, on the incidence of 
rent taxation, 34. 

School tax, 117. 

Scituate, Massachusetts, land 
of, undervalued, 127. 

Sears Building, Boston, 74. 

Seligman, E. R. A., on impos- 
sibility of shifting a tax 
on rent, 34, 35; in the 
Saratoga debate, 102. 

Selling value, of land, con- 
trasted with assessed value, 
16; of land, on untaxed 
value, 36, 188. 

Shearman, Thomas G., defini- 
tion of rent, 4; on impos- 
sibility of shifting a tax 
on rent, 33; on effect of 
present taxes, 108; on 
sufficiency of the single 
tax, 116; on overvaluation 
of agricultural land, 125, 

CM l27 ' 

Single tax, a natural tax, 
4,41,83, 115; effect of, 8; 
calculation of, for Boston, 
18; resulting exemptions, 
24; as on income tax, 25; 
objections answered, 48-52, 
89-91, 119; illustrated, in 
Winter Street, Boston, 55- 
65; effect of, on buildings, 
57, 69, 75, 77, 80, 82; 
illustrated, in Washington 
Street, Boston, 66-78; 
based on a scientific prin- 
ciple, 76, 84, 175; not 
really a tax, 76, 113; 
explained, 76, 91, 153-163. 
illustrated, in Cornhill, 
Boston, 79-92; cure for 
special privilege, 86; not 
land nationalisation, 96; 
origin in justice, 102; 



justice of, 108-121; effect 
on distribution, 113, 176; 
considered in relation to the 
Massachusetts constitution 
and the farmer, 1 22-13 1; 
ethics of, 167, 168. 

Smith, Adam, on rent a social 
product, 28; on impos- 
sibility of shifting a tax on 
ground rent, S3- 

Socialism, and the single tax 
contrasted, 118, 167. 

Special privilege, taxation of, 
8, 27, 86, 150; source of 
inequalities, 109, 148. 

Spencer, Herbert, on private 
property in land, 95, 99. 

St. Paul 's Church, Boston, 86. 

Tax, capitalisation of, in. 
See also Taxation. 

Taxation, natural, 4, 41; 
source of rent, 5 ; of special 
privilege, 8; of ground 
rent, 10, 115; and distri- 
bution, 11, 108, 148; 
absence of economy in, 
15, 74, 81; of real estate 
only, 20; imposed by time, 
21; compared with mort- 
gage, 24; of monopoly, 27; 
the natural law of, 30; of 
land value, cannot be 
shifted, 31, 155, 188; of 
buildings, 43; effect on 
building development, 58, 
65> 7°> 75, 77> 80, 82; in 
Boston, 72; natural basis 
of, 83; relation to property, 
98; double discrimination 
against farmers, 124; on 
agency of regulation, 132- 
147; of incomes and inheri- 
tances, 148-152. 



INDEX 



229 



Time, the tax imposed by, 21. 
Tolstoi, 99; his single tax 

doctrine explained, 168- 

171. 

Undervaluation of urban land, 

125. 
Usufruct, III. 

Valuation. See Value. 

Value, assessed and selling, 
contrasted, 16; of land and 
buildings, compared, 62- 
64; and valuation, III; 
net, 112. 

Wages, increased by taxation 
of rent, 11, 113, 122. 



Walker, Francis A., on impos- 
sibility of shifting a tax 
on rent, 34. 

Washington Street, Boston, 
and the single tax, 66-78. 

Wealth, contrasted with land, 
no. 

Whitman, Massachusetts, 
land of, undervalued, 127. 

Wilson, Woodrow, on the right 
attitude of corporations 
toward the public, 135; on 
legislative and executive 
regulation, 137. 

Winn, Henry, on the reason for 
taxation, 75. 

Winter Street, Boston, and the 
single tax, 55-65. 



f EB 17 1909 



LIBRARY OF CONGRESS « 

029 826 134 



